SA in technical recession

SOUTH Africa has officially entered a technical recession, after Stats SA announced on Tuesday that the country’s real gross domestic product had decreased by 0.7 percent in the second quarter of the year.

This follows a GDP contraction of 2.2 percent in the first quarter.

A technical recession is two consecutive quarters of negative growth. The first quarter’s GDP contraction has now also been revised upward to -2.6 percent.

This is SA’s first recession since the 2008-2009 global financial crisis.

Shortly after the economic data release at 11:30, the rand piled on losses against the dollar, falling to a daily low of R15.23/$ down 2.4 percent on the day.

Ahead of the announcement in Pretoria, analysts at FNB had been cautiously optimistic that SA could avoid a recession, but said it would be a ‘close call’.

The ABSA Purchasing Manager’s index for August, meanwhile, released Monday came in at a 13-month low. The largest negative contributors to GDP growth were the agriculture industry - which decreased by a whopping 29.2 percent, followed by the transport industry (-4.9 percent) and trade (-1.9 percent).

“This (decrease in agriculture) was largely driven by a decline in the production of field crops and horticultural products,” said Stats SA in a media statement. - Fin24