South Africa in recession after land threat

South Africa in recession after land threat

Africa's second largest economy has plunged into another "technical recession" after the country's GDP shrunk by 0.7 percent in the second quarter of the year.

Considering average growth of just 0,6% during the first half of this year, the SARB is likely to revise lower its projection for 2018 and 2019 when its Monetary Policy Committee (MPC) meets again in September.

"The trade industry experienced its second consecutive quarter of negative growth, falling by 1,9%".

According to the figures released by Stat SA, slow-paced activities in agriculture, forestry, fishing, and the transport industry significantly affected the economy in the last quarter.

The 1.5 percent growth estimated given by the National Treasury in February is now at severe risk and will likely be revised downwards, Citadel chief economist Maarten Ackerman said.

Mining sector recorded a growth of 4.9 per cent and finance by 1.9 per cent.

The continued drought in the Western Cape and a severe hailstorm in Mpumalanga which led to extensive crop damage contributed to the slowdown of agricultural production to 29.2% in the second quarter following 33.6% fall in the first quarter.

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Gross fixed capital formation decreased by 0.5%.

Professor Raymond Parsons from the North West University Business School also highlighted the pockets of strength in his reaction statement. That compares with a decline of 2.6 per cent in the first quarter and is the first recession since 2009. There are fortunately still several pockets of strength in the economy.

Bianca Botes, an analyst at Peregrine Solutions, told the Independent: "The economy remains lacklustre, partially driven by policy uncertainty".

Two consecutive quarters of GDP contraction suggests a technical recession.

Godongwana said the party was calling for a shared vision and collective action in creating jobs and growing the country's ailing economy.

Electricity consumption, however, increased by 2.1%, despite a 5.23% increase for direct Eskom customers which was approved by The National Energy Regulator of South Africa earlier this year.

The economy has struggled to recover meaningfully since taking a knock from a global recession a decade ago.

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