South Africa’s economy shrunk 0.7 percent in the second quarter of negative growth, which was driven by contractions in agriculture, transport, trade and manufacturing industries. The recession which is the first in South Africa since the 2008-2009 global financial crisis, came after its agricultural sector was hit by a fall in field crops, drought in the Western Cape and severe hailstorms in Mpumalanga province that damaged production.
The GDP growth rate compared to a year ago was 0.4% higher, which was below the 0.8% in the previous year’s Q2 and below the 1.0% rise expected. The Pound-Rand exchange rate rose over 1.6% from 19.2216 to 19.5118 in the ten minutes after the release at 10.40 B.S.T.
Speaking on the new development, Micheal Power, an asset manager at Investec, said domestic and international events had combined to stall economic growth.
“We are getting no help from the outside with the strengthening dollar, the escalating trade war and issues that are now facing emerging markets,” he told AFP.
“In some respects, this can be seen as a good thing if it means that we are now not drinking to avoid the hangover.”
This came after Bloomberg reported that only one of 12 economists surveyed, had predicted a contraction.
Daniel Silke, an Independent analyst who also commented on the recession recorded in Tuesday’s data, said the figures reflected an “inability to create confidence-building measures to enhance work opportunities and uplift investor sentiment.”
On the other hand President Cyril Ramaphosa who has been on an investment drive to attract foreign investment and tackle unemployment of about 28 percent, had promised a “new dawn” after his predecessor Jacob Zuma’s scandal-tainted nine-year reign.
It should also be noted that South Africa experienced three consecutive quarters of economic decline, during the 2008-2009 global financial crisis. President Cyril Ramaphosa who took over from Zuma in 2019, will also be facing an election in 2019.
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