South Africa has entered a technical recession for the first time since in nearly a decade. The news was officially confirmed by Statistics South Africa (StatsSA). The South African GDP contracted by 0.7% in the second quarter of 2018.
The news was widely expected after economists issued dire warnings about the weak state of the stuttering economy last week. The technical recession means President Cyril Ramaphosa faces the same problems as his predecessor Jacob Zuma did in his first six months in office.
Weak agricultural outputs, low consumer spending, global trade wars and a lack of institutional reforms have been blamed for the contraction of the economy.
Briefly.co.za looks at six important facts about the recession:
1. The agriculture sector suffered the most
The agriculture sector was by far and away the hardest hit sector of the economy. The sector saw a 29% decline in the first quarter of 2018 and contributed a total of -0.8% to the overall GDP.
2. Transport and trade sectors took a knock
The transport and trade sectors were the second worst off parts of the economy. StatsSA revealed that the transport, storage and communication industries suffered a 4.9% contraction which contributed to a total of -0.4% of the GDP.
The trade, catering and accommodation industries dropped by 1.9% which according to Fin24.com made up a total of -0.3% of the GDP.
3. There were some positive numbers
While the overall picture of the economy was bleak there was some growth. The business services sector, real estate sector and finance industries all posted positive growth figures, but these were not enough to stimulate the rest of the economy.
4. Exports were higher
Net exports rose by 3.1% led in large part by an increase in the trade of precious metals, vegetables and various mineral products.
5. The manufacturing sector shrunk by 0.3%
The manufacturing sector as a whole contracted by 0.3% in the second quarter of 2018. While all 10 divisions within the sector suffered the motor vehicles, parts and accessories, furniture and other division suffered the most.
6. The rand took a tumble
The already beleaguered local currency took a tumble once the news broke. The rand dropped 2.4% of its value by midday. The rand started the day at R14.85 to the US dollar but dropped to R15.22 by 13:00. The currency was at R15.28 at 16:45.
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