Africa's Second-Largest Economy South Africa Enters Recession

Xi Jinping and Cyril Ramaphosa

Xi Jinping and Cyril Ramaphosa

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.

Manufacturing also contracted for a second quarter in a row, down 0.3 percent.

A recession is defined as two consecutive quarters of declining gross domestic product and points to a prolonged slowdown in economic activity.

Mining, construction, electricity, finance and personal services experienced positive growth, but it was not enough to lift overall economic growth out of negative territory.

In addition, the statistics agency said agriculture declined the most, recording an annualised 29.2 per cent contraction, while mining production expanded 4.9 per cent from the previous quarter.

The South African Rand weakened notably on Tuesday, August 04 after GDP figures showed the country falling into a technical recession.

"We didn't think we would have the second contraction, we were hoping we would have a moderate recovery".

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"But now with 0.9% for the first half of the year, it's going to be extremely hard".

"The emerging market sell-off continuing and the dollar going on a bit of a rampage are also having an effect on our market".

"These GDP numbers confirm that Ramaphoria period was pretty temporary. It was exclusively based on expectation that the political changes would down the line result in better outcomes", said Pienaar.

Cyril Ramaphosa, 65, a former trade union leader, led the historic negotiations in the 1990s to end apartheid before launching a business career that made him one of the country's wealthiest men.

The news is expected to increase concerns over the weakening rand, along with plans for a widely-debated land reform and negative after-effects triggered by state corruption under former president Jacob Zuma. "What it does is that the money that normally would have been spent on the economy by those who earn income, has not been spent on real goods that are produced by the economy", Pamla said.

"I don't think he said much to move the share price".

Nene also conceded that this year's increase of Value-Added Tax had taken money out of the pockets of citizens‚ with a decline in household consumption cited as one of the reasons for the contraction in GDP.

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