South Africa: Two recessions in two years
The recession is another setback to president Cyril Ramaphosa's efforts to revive the economy.
South Africa entered its second recession in two years in the final quarter of last year, as agriculture, transport and construction contracted, data showed yesterday.
The recession is another setback to president Cyril Ramaphosa's efforts to revive the economy and stave off a downgrade of the country's sovereign debt to below investment grade by the rating agency Moody's.
Statistics South Africa said the economy shrank 1.4% in the fourth quarter, following a revised 0.8% contraction in the third quarter.
Economists polled by Reuters had predicted a contraction of 0.1%.
“The economy is in recession again.
That is two consecutive quarters of contraction, after being in recession in the first two quarters of 2018,” Joe de Beer, Stats SA's deputy director-general for economic statistics, told reporters.
Gross domestic product shrank 0.5% year-on-year in the fourth quarter after expanding 0.1% the quarter before. The economy expanded 0.2% in the 2019 calendar year compared with 0.8% in 2018.
Private sector
“You can lay a lot of the blame on (power utility) Eskom and the loadshedding [power cuts]. But you must also blame government - reform is happening way too slowly,” said Wayne McCurrie, an FNB portfolio manager .
Spending shrank 1.2% in quarter-on-quarter terms after contracting by a revised 0.4% in the third quarter, Stats SA said.
South African retailers have struggled to increase earnings as cash-strapped shoppers spend money on food rather than higher-margin discretionary goods such as electronics, hurting the likes of Walmart-controlled Massmart.
Banks have also struggled to increase their earnings at home and are increasingly relying on businesses elsewhere in Africa to maintain their performance.
Nedbank, one of South Africa's four largest banks, yesterday reported a near 7% drop in full-year profit and revised a key profitability target as the worsening economy pushed up defaults and cut demand for credit.
Last week, the National Treasury cut its 2020 economic growth forecast to 0.9% and said it would cut the public-sector wage bill to contain a rising budget deficit.
“The Treasury is now clearly on a pro-growth trajectory,” said Razia Khan, chief Africa and Middle East economist at Standard Chartered Bank.
“The shock nature of this GDP print highlights just how urgent an exercise that is, and how there is no room to get it wrong.”
– Nampa/Reuters
Mfuneko Toyana and Tumelo Modiba -
The recession is another setback to president Cyril Ramaphosa's efforts to revive the economy and stave off a downgrade of the country's sovereign debt to below investment grade by the rating agency Moody's.
Statistics South Africa said the economy shrank 1.4% in the fourth quarter, following a revised 0.8% contraction in the third quarter.
Economists polled by Reuters had predicted a contraction of 0.1%.
“The economy is in recession again.
That is two consecutive quarters of contraction, after being in recession in the first two quarters of 2018,” Joe de Beer, Stats SA's deputy director-general for economic statistics, told reporters.
Gross domestic product shrank 0.5% year-on-year in the fourth quarter after expanding 0.1% the quarter before. The economy expanded 0.2% in the 2019 calendar year compared with 0.8% in 2018.
Private sector
“You can lay a lot of the blame on (power utility) Eskom and the loadshedding [power cuts]. But you must also blame government - reform is happening way too slowly,” said Wayne McCurrie, an FNB portfolio manager .
Spending shrank 1.2% in quarter-on-quarter terms after contracting by a revised 0.4% in the third quarter, Stats SA said.
South African retailers have struggled to increase earnings as cash-strapped shoppers spend money on food rather than higher-margin discretionary goods such as electronics, hurting the likes of Walmart-controlled Massmart.
Banks have also struggled to increase their earnings at home and are increasingly relying on businesses elsewhere in Africa to maintain their performance.
Nedbank, one of South Africa's four largest banks, yesterday reported a near 7% drop in full-year profit and revised a key profitability target as the worsening economy pushed up defaults and cut demand for credit.
Last week, the National Treasury cut its 2020 economic growth forecast to 0.9% and said it would cut the public-sector wage bill to contain a rising budget deficit.
“The Treasury is now clearly on a pro-growth trajectory,” said Razia Khan, chief Africa and Middle East economist at Standard Chartered Bank.
“The shock nature of this GDP print highlights just how urgent an exercise that is, and how there is no room to get it wrong.”
– Nampa/Reuters
Mfuneko Toyana and Tumelo Modiba -
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