Ramaphoria Officially Over in South Africa

The South Africa economy is in recession for the first time since 2009 following two consecutive quarters of negative GDP growth. So it seems that Ramaphoria–the positive wave brought by President Cyril Ramaphosa’s ascension to power in February—appears to be officially over.

The news has come as a surprise to many analysts as they expected the economy to narrowly avoid a second quarter of decline, BBC reported.

The second largest economy in Africa is reeling: rising fuel prices, increased cost of living and an unemployment rate close to 30% is a stark indicator of how much work President Ramaphosa will have to do to rescue the country from a cliff edge.

Statistics South Africa said the economy contracted at an annualized rate of 0.7% in the second quarter, and this follows a 2.6% negative growth in the previous three months.

The biggest contributor to South Africa’s recession has been a massive 29% decline in agricultural output.

The president told parliament last month that his cabinet was working on a stimulus package for the economy; and South Africa is seeking $100 billion investments from international investors.

Statistics South Africa had said in 2017 that the economy was in recession, but its figures have since been revised.

South Africa’s rand extended the worst decline among emerging-market peers as data showed the country’s economy had slipped into a recession. Stocks and bonds also fell, Bloomberg reported.

The rand weakened as much as 2.6% after data showed gross domestic product unexpectedly contracted in the second quarter, raising the nation’s risk profile at a time when emerging-market assets are under pressure from a rising US dollar and global trade tensions.