Economic Crisis: South Africa enters recession for first time since 2009

07 September, 2018, 11:01 | Author: Billie Castillo
  • South Africa Enters Technical Recession

The economy contracted by 0.7% in the second quarter of this year, following on from a 2.6 % contraction in the first quarter of 2018, leading to a technical recession, Stats SA confirmed on Tuesday. "Given the outright decline in real GDP in both the first and second quarters, we (Sanlam) lower our average expected real GDP growth rate for 2018 to 0.75%", Kamp said.

South Africa slides into recession amid failing government reforms Massive declines in the agricultural, transport and retail sectors have dragged the South African economy into recession after almost a decade of growth.

The interventions include creating tax credits for companies which invest in sustainable job creation‚ reducing regulatory red tape and government up-scaling investment in economic and social infrastructure.

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

At the beginning of the year, South Africa's economy fell at a staggering 2.6 per cent annual rate - a figure that was revised from a 2.2 percent fall. The massive fall was led by a decline in the production of field crops and horticultural products as well as continued drought conditions in some regions.

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But mining, construction, electricity, finance and personal services experienced growth in the second quarter.

Imagine the South African economy as a household.

According to the figures released by Stat SA, slow-paced activities in agriculture, forestry, fishing, and the transport industry significantly affected the economy in the last quarter. Increased production was reported for mining of "other" metal ores including platinum group metals, copper and nickel. 4 it was down more than 3 percent against the USA dollar at 15.37. The SA Reserve Bank has estimated that the GDP growth will average at 1.2% in 2018.

However, analysts had predicted that the economy would grow 0.6 per cent in the latest quarter.

"It's been clear for quite some time that Ramaphoriawas temporary in the first quarter of this year and of course, the global economy has also moved against us".

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