World Economy

S. Africa Alarmed Over Slumping Economy

S. Africa Alarmed Over Slumping EconomyS. Africa Alarmed Over Slumping Economy

The chief economist at, Mike Schussler, has warned South Africans to brace themselves for a recession.

The latest visa restrictions, droughts, strikes and ineffective state owned enterprises are some of the reasons why the country could be pushed into a recession next year, South Africa Broadcasting Corporation reported.

Schussler says there has been a decline in South Africa’s export commodities in the last two months and this is going to put the mining sector under pressure.

He says if the drought continues there is going to be a serious problem in the agricultural sector and this will have a knock on effect on manufacturing, transport, finance and tractor sale.

Schussler said, to remedy the situation the country needs to adopt an open skies policy for aeroplanes, let go off state assets like the South African Airways and review the Black Economic Empowerment policy.

 Slump in Prices

Gross domestic product increased an annualized 0.7% in the three months through September compared with the previous quarter, when it shrank 1.3%, the statistics office said in a report released on Tuesday in the capital, Pretoria. The median estimate of 18 economists surveyed by Bloomberg was expansion of 1%.

The rebound in output last quarter masks a deterioration in the economy this year triggered by power shortages and a slump in prices of platinum, copper and other commodities. The economy is forecast by the central bank to expand 1.4% this year, which would be the slowest pace since the 2009 recession.

South Africa narrowly avoided a second recession in six years as manufacturing rebounded in the continent’s second-largest economy.

Manufacturing sector contributed positively to the GDP growth in the third quarter. It grew 6.2% from the previous quarter. Finance, real estate and business services contributed 0.6 of a percentage point based on growth of 2.8%.

At the same time, economic activity in the mining and quarrying industry reflected a negative growth of 9.8%.