South Africa Economy Enters Recession In Q2
September 04 2018 - 3:34AM
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South Africa's economy contracted for a second straight quarter
during the three months to June, thus entering a recession, a first
in nearly a decade.
Gross domestic product shrunk a seasonally adjusted and
annualized 0.7 percent quarter-on-quarter, Statistics South Africa
said Tuesday.
That was smaller than the 2.6 percent contraction seen in the
first quarter, which was revised from 0.8 percent reported
earlier.
Two consecutive quarters of GDP contraction suggests a technical
recession.
South Africa experienced its last recession during the 2008-2009
global financial crisis with three consecutive quarters of economic
decline, the statistical office said.
The latest downturn was a result of a fall-off in activity in
the agriculture, transport, trade, government and manufacturing
industries.
Farm output plunged 29.2 percent after a 33.6 percent slump in
the first quarter. The massive fall was led by a decline in the
production of field crops and horticultural products as well as
continued drought conditions in some regions.
Decreased activity in both land and air transport caused a 4.9
percent contraction in the transport industry. This was worsened by
industrial action and a decline in freight transport.
The trade industry shrunk for a second straight quarter with
output falling 1.9 percent. Subdued sales in both motor and retail
trade were to blame for the downturn.
Manufacturing also contracted for a second quarter in a row,
down 0.3 percent. This was led by a fall in the production of
electrical machinery, transport equipment including motor vehicles,
and products within the furniture and 'other' manufacturing
division.
Positive growth was witnessed in mining, construction,
electricity, finance and personal services. However, that was not
enough to lift overall economic growth out of negative territory,
the agency said.
Survey data from the BER showed on Monday that the Absa
Purchasing Managers' Index declined to 43.4 in August from a solid
51.5 points recorded in July. This is the lowest level in just over
a year.
The deterioration was driven by sharp declines in the new sales
orders index as well as the business activity index, the survey
said.
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