4 reasons why Ramaphosa should worry about SA's first recession since 2009

4 reasons why Ramaphosa should worry about SA's first recession since 2009

Cyril Ramaphosa has not even been the president of South Africa for a year, and already things are not looking too great in the country.

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On Tuesday, the GDP showed another economic decline in the second quarter of 2018, which meant South Africa was in a technical recession for the first time since 2009.

Earlier Briefly.co.za reported what the recession meant for the country and now we're looking at four reasons why Ramaphosa can start biting his nails over the SA economy.

1. Bad news for the unemployment rate

With unemployment already at a 15 year high, according to BusinessLIVE, the recession would not be helping the situation at all.

A recession means a decline in economic activity, which also means less job opportunities and a higher unemployment rate.

2. The recession's effects on SA politics

The current economic state would not be helping President Cyril Ramaphosa's campaign ahead of the 2019 national elections.

In fact, according to Business LIVE editor Lukanyo Mnyanda, the recent recession could have devastating effects on the ANC's political campaign before next year's elections.

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3. The rand loses more and more power against the dollar

As the crucial GDP was announced on Tuesday, the rand dropped to its weakest against the dollar since 2016, when Jacob Zuma was still in power.

The rand reached over R15/$ after the GDP was released and it continued to weaken as the reports were confirmed.

And, it does not appear that the rand would be gaining strength anytime soon. In fact, a report by Business Tech added according to George Saravelos, global co-head of FX research at Deutsche Bank, the worst case scenario would see the rand reaching R24/$1 by 2019.

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4. SA's deteriorating manufacturing sector

According to Business LIVE, the manufacturing sector makes up 13% of the GDP and the Absa purchasing managers index (PMI) showed on Monday it reached its lowest level in 13 months.

This is bad news for those who hoped the manufacturing sector would contribute to the restoration of the economy.

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Briefly South Africa has gone through the list of current and immediate past African leaders and is ready to present Top-5 tips on how to be an average African president.

Source: Briefly.co.za

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