Explainer: What does the recession mean for South Africa?

Roman Schwartz
September 7, 2018

The widely recognised indicator of recession is two (or more) consecutive quarters of negative growth.

The trade, catering and accommodation industry decreased by 1.9 percent and contributed -0.3 of a percentage point.

The country's statistics agency said productivity from the agricultural sector plunged 29.2 per cent in the second quarter, while the transport, communication and storage sector also dropped 4.9 per cent.

StatsSA said agriculture was hit by a fall in field crops, drought in the Western Cape and severe hailstorms in Mpumalanga province that damaged production.

"I don't think people should panic".

Head of the party's economic transformation subcommittee Enoch Godongwana said globally‚ economic recession affected electoral support.

Industrials lost 1.76 percent, banks 4.17 percent, general retailers 4.27 percent, and food and drug retailers 2.25 percent, but the gold index added 0.62 percent. This was worsened by industrial action and a decline in freight transport.

This after Statistics SA announced on the same day, that the country's Gross Domestic Product had decreased by 0.7% in the second quarter of the year.

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This follows a dismal performance in the first quarter, when GDP shrank by a revised 2.6%.

"At that stage it was a fairly conservative forecast". The negative first half of the year tells you that we are not doing what we should do. The idea that you can grow the economy because you feel good about the person occupying the presidency and yet, he has not proposed any radical changes to the economy instead has called for endless summits, demonstrates the degeneration of thinking both by private sector and government. Weak growth makes it more hard to raise interest rates, leaving the rand even more vulnerable at a time when developing nations are tightening policy.

"We didn't think we would have the second contraction, we were hoping we would have a moderate recovery". This latter factor is the likely result of the government trying to reign in the budget deficit.

Democratic Alliance leader Mmusi Maimane said he would write to National Assembly speaker Baleka Mbete requesting an urgent debate on how to get the country's economy "up and running again".

"We have seen depreciation in a lot of emerging economies, including Nigeria". One also needs to be realistic that even in the first quarter when we had that bounce in confidence, it was not based on fundamental underlying improvements in the economy.

Hope of a turnaround with former businessman Ramaphosa at the helm have dissipated over the last few months.

Most analysts had expected a moderate increase in GDP.

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