Published: Thu, September 06, 2018
Markets | By Noel Gibbs

South African economy, 1 of Africa's biggest, in recession

South African economy, 1 of Africa's biggest, in recession

This follows a dismal performance in the first quarter, when GDP shrank by a revised 2.6%.

The following are news items in South African major news outlets on Monday.

The country's Gross Domestic Product was reported at a decline of 2.6 per cent in the first quarter and is the first recession since 2009.

In contrast, mining increased by 4.9% and contributed 0.4 percentage points of growth; while finance, real estate and business services increased by 1.9% and also contributed 0.4 percentage points.

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The South African Rand weakened notably on Tuesday, August 04 after GDP figures showed the country falling into a technical recession.

"The 1.5% growth estimated by National Treasury in February's budget speech is now at severe risk and will likely need to be revised downwards, creating a very hard environment next month for the delivery of the Medium Term Budget Policy Statement", he said. Industrials lost 1.76 percent, banks 4.17 percent, general retailers 4.27 percent, and food and drug retailers 2.25 percent, but the gold index added 0.62 percent. South African national currency, the rand, extended declines against the USA dollar to more than two percent as government bonds fell after the released data.

According to fin24, in August, President Cyril Ramaphosa punted his initiative to attract investment as a remedy to boost economic growth to members of Parliament.

It was gathered that the economy which contracted by 0.7% in the second quarter pushed the country into recession.

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Bianca Botes, an analyst at Peregrine Solutions, told the Independent: "The economy remains lacklustre, partially driven by policy uncertainty".

This is despite expectations from many economists that SA would narrowly miss a recession.

"We didn't think we would have the second contraction, we were hoping we would have a moderate recovery". The uncertainty caused by the proposed amendment to the Constitution is hindering investments and expansion, which would bring about economic growth and more job opportunities.

"Clearly this is not what Ramaphosa would like running into the elections next year", he said.

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