Updated: March 4, 2021
South Africa is now in recession for the first time since 2009, data released on Tuesday showed.
“We are in a recession. We reported a contraction in the first quarter … and now in the second quarter with a fall of 0.7 percent,” South Africa’s Statistician-General Risenga Maluleke said, according to Reuters, which described the recession as “a stinging blow to President Cyril Ramaphosa’s efforts to revive the economy after a decade of stagnation”.
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“There is no way to sugar coat the numbers, the growth picture in the first half of 2018 is ugly and it shows in this economy that there is broad based weakness across the primary and tertiary sectors of the economy,” said senior economist at BNP Paribas Jeffrey Schultz.
“It is spooking the market it wasn’t an expected print, a lot of analysts and ourselves were expecting a very modest second quarter print, but we certainly weren’t expecting a negative”.
Statistics South Africa said the economy contracted by 0.7 percent in the second quarter, mainly because of declines in the agricultural, transport and retail sectors.
Analysts had predicted that the economy would grow by 0.6 percent in the latest quarter.
Statistics South Africa said agricultural output fell 29.2 percent in the second quarter, while the transport, communication and storage sector fell 4.9 percent. Mining output grew by 4.9 percent and finance by 1.9 percent, however, Reuters reported.
Stats SA also said the economic contraction in the first quarter was steeper than initially recorded, at 2.6 percent.