New data suggests record economic drop for South Africa

Key South African data this week suggests a record economic contraction in the second quarter as the damage wrought by a nation wide lockdown to curb the spread of the corona virus pandemic becomes clear. Manufacturing production, mining output and retail sales plunged in the three months through June as the country imposed a strict lockdown on the 27 March that shuttered almost all activity except essential services for five weeks.

With mining and manufacturing contributing about a fifth of total gross domestic product and trade, which include retail, making up 15%, the drop means the recession probably became much deeper in the second quarter. Africa's most-industrialised economy contracted an annualized 2% in the three months through March , extending its recession to a third quarter even before the impact of the global pandemic and measures to curb its spread were felt . Reserve Bank forecast show an annualized drop in GDP of 32.6% for the three months through June from the previous quarter. That would be the deepest quarterly decline since at least 1990 and is conservative relative to Investec Bank Ltd's estimate of a 48.2% annualized contraction. The statistics office is scheduled to publish GDP data for the second quarter on the 8th September. The government started a gradual and phased re-opening of the economy on May 1 and restrictions were eased to so called level 3 a month later. However, the closure of some businesses and scaled down operations that have lead to job losses are expected weigh on demand, slowing the recovery. The National Treasury sees the economy contract by 7.2% this year, the most in almost nine decades. What Bloomberg's economist says...

"Bad as it is, the 2Q contraction in growth has already happened. What matters now is the strength and pace of recovery. " With restrictions now lifted on most sectors, the main constraint on growth will shift away from the ceiling created by containment measures and onto demand. The latest data already point to slowdown of momentum- and indication that economic activity and demand remains subdued. We therefore expect a weak recovery.

(Source: https://businesstech.co.za/news/business/425236/new-data-suggests-record-economic-drop-for-south-Africa/)

Question

Evaluate the major economic indicators as discussed in the article and formulate appropriate fiscal and monetary policies that would be required to address these indicators.