South Africa slips into recession


Stats SA said: "The widely recognised indicator of recession is two (or more) consecutive quarters of negative growth (real GDP quarter-on-quarter)".

South Africa's rand fell more than 2 percent yesterday and government bonds fell, after the economy slipped into a recession in the second quarter. South African national currency, the rand, extended declines against the United States dollar to more than two percent as government bonds fell after the released data.

Analysts had predicted that the economy would grow by 0.6 percent in the latest quarter.

The manufacturing industry contracted by 0.3 percent in the second quarter.

Africa's most developed economy needs faster economic growth if it is to reduce high unemployment now at 27 percent and alleviate poverty and inequality that stokes instability.

The country's statistics agency said productivity from the agricultural sector plunged 29.2 per cent in the second quarter, while the transport, communication and storage sector also dropped 4.9 per cent.

Positive growth was witnessed in mining, construction, electricity, finance and personal services.

"Overall, the "Ramaphosa revolution" is still struggling to become visible, but it has always been the case that economic improvements will take much longer to become tangible than the market is ready to wait for".

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Cyril Ramaphosa, 65, a former trade union leader, led the historic negotiations in the 1990s to end apartheid before launching a business career that made him one of the country's wealthiest men.

The president is now in China, attending a summit.

Maimane said SA was getting "poorer and poorer" under the ANC, with record high levels of unemployment, the Value-Added Tax increase and rising fuel costs all engulfing South Africans this year.

The South African Reserve Bank (SARB) said in May that it expects economic growth to rise from an average of 1,3% a year ago to 1,7% in 2018.

The 1.3% seasonally adjusted and annualised decrease in final household consumption expenditure in the second quarter of 2018 was the first outright decline in this expenditure category since the start of 2016, Kamp said.

With unemployment already at a 15 year high, according to BusinessLIVE, the recession would not be helping the situation at all.

"But, that said, the tightening of global financial conditions imply countries running macroeconomic imbalances will be placed under closer scrutiny by investors, especially if imbalances reflect a weak fiscal position".

"Emerging markets are in contagion and the rand is quite weak".