South Africa Heading Toward Recession

In spite of President Cyril Ramaphosa’s attempts to revive South Africa’s struggling economy, there is a strong possibility it may slip into recession. Economists have predicted negative growth for the second quarter, which would throw the country into recession.

The rand fell to its worst level against the dollar in nearly 18 months this week before it recovered to  R14.04. Poor performance in the manufacturing, agriculture and mining sectors has been cited as a warning sign, IOL reported.

Data from Statistics South Africa showed that manufacturing output growth was 0.7% year-on-year in June. Worried eyes are now focused on the performance of the mining sector’s results, to be released on Tuesday.

Enoch Godongwana, chairperson of the ANC’s economic transformation committee, said they were concerned about the prospect of the country falling into recession. He said one of the issues discussed during the party’s recent meeting was a stimulus package which would kick-start economic growth and avert future threats of recession.

A recession happens when a country registers negative growth for successive quarters. In the first quarter the economy slumped by 2.2%, its worst performance in nine years.

In June last year, Stats SA announced that South Africa was in a technical recession for the first time since 2009. This was after the country’s economy contracted by 0.7% in the first quarter of 2017 after shrinking by 0.3% in the fourth quarter of 2016. Then-president Jacob Zuma was heavily criticized.

Efficient Group economist Dawie Roodt said whatever the results of the quarter would be, “the fact is that the country has always been in recession because people are getting poorer and poorer”.