The Free State economy is headed for a harsh decline with an expected contraction of -3.7% this year due to the Covid-19 pandemic. This is according to MEC of the Department of Small Business Development, Tourism and Environmental Affairs (Destea), Makalo Mohale during his Budget Vote speech on Tuesday.
Most industries throughout the province, with the exception of agriculture, have been hit hard by the pandemic in the form of the nationwide lockdown and restrictions in economic activity.
“Accordingly, the International Monetary Fund predicts that the global economy will experience its worst recession since the Great Depression of the 1930’s, with global output dropping by -3.0% in 2020. In this context, the Free State economy is projected to contract by -3.7% in 2020 as all the economic sectors, except agriculture, are expected to experience serious decline,” explained MEC Mohale.
According to the MEC, the mining sector has been most affected with an expected contraction of -10.4%. This is likely to be followed by construction with a decline of -8.4%; manufacturing by -4.2%; trade by -3.4% and finance by -2.9%. This while the agricultural sector is expected to grow by 8.1% in 2020.
During his own Budget Vote speech, MEC of the Department of Agriculture and Rural Development, William Bulwane, stated that Mangaung Metro has been allocated the majority of funding for farming projects and agri-business for farmer development programmes.
“In Mangaung Metro we have set aside R 34, 174 million for the implementation of livestock and vegetables projects,” he said.
The MEC added that despite the expected growth in agriculture small farmers are likely to face income challenges this year.
“Smallholder and subsistence farmers mainly in communal farming areas will encounter cash flow challenges if not supported with specific agricultural inputs to enable them to complete the production cycle and stay in production.
“Agriculture could be the shining light in the dark economic landscape if we can ensure that our farmers are supported with production inputs to complete the production cycle and stay in production,” explained Bulwane.