South Africa has slipped into a technical recession as manufacturing and trade sectors dragged economic output down, according to Statistics South Africa.
A technical recession is described as two successive quarters of economic decline and South Africa has seen its economy shrink by 0.7% in the first quarter of 2017, and by 0.3% in the fourth quarter of last year. All sectors saw a decline except agriculture and mining.
— Stats SA (@StatsSA) June 6, 2017
This is the second recession for Africa’s most developed economy and comes at a time when political uncertainty has slowed the implementation of economic reforms.
Under siege President Jacob Zuma fired his internationally respected finance minister Pravin Gordhan in March this year, which caused the country’s investment grade to be reduced to junk status by two ratings agencies. Unemployment has also rose to a 14-year high in the first three months of 2017.
As news of the slowdown in South Africa broke, the rand lost 1.1% against the dollar to reach ZAR1-$12.8470.
— Joe Weisenthal (@TheStalwart) June 6, 2017
The weak economic data came as a bit of a surprise to economist who had mostly assumed the economy would grow somewhat this year based mainly on a revival of the agriculture sector following the 2015 drought and recovering global commodity prices.