South African Reserve Bank and the Recession 2010

1.

a.) According to SARB, the real gross domestic product of South Africa decreased by 1.8 % because of an intense economic contraction in the beginning of the year (2010:1). This is because a large part of South Africa’s real GDP comes from the exporting of commodities. According to Stewart, mining companies cut production output and jobs (2009:1). The reaction would be because of diminishing demand on the international market for South Africa’s exported goods because on the global recession. This means that aggregate demand decreased and as a result of this, aggregate supply would decrease as well. Aggregate supply in the short run is reduced by first cutting jobs. This would lead to an increase in the unemployment rate.

b.) Some of the biggest industries in South Africa are from the private sector such as mining and manufacturing. As a result of the decrease in demand of goods from these industries on the international market, many jobs would be shed here first.

List of References:

· SARB, 2010. Quarterly Bulletin: March 2010. [Online]. Available: http://www.reservebank.co.za/internet/Publication.nsf/LADV/92A620ACD595CF42422576EB00555EF5/$File/QBMarch2010.pdf. [Accessed 11 August 2010].

· STUART,R , 2010. South Africa Enters Recession, GDP Falls 6.4%. [Online]. Available: http://online.wsj.com/article/NA_WSJ_PUB:SB124336591959555389.html. [Accessed 11 August 2010].