By Colleta Dewa
Johannesburg – South Africa has plunged into economic recession in the second quarter of the year, for the first time since 2009.
This unanticipated development was confirmed by South Africa’s Statistician-General, Risenga Maluleke, on Tuesday.
“We are in a recession. We reported a contraction in the first quarter and now in the second quarter with a fall of 0.7 percent,” said Maluleke.
According to Statistics South Africa (Stats SA), the country’s gross domestic product (GDP) fell by 0, 7% in the second quarter of 2018, a big blow to President Cyril Ramaphosa’s government which has been focusing on fostering economic development.
“The agriculture, forestry, fishing industry and the transport, storage and communication industry were the largest negative contributors to growth in GDP in the second quarter.
""he agriculture, forestry and fishing industry decreased by 29,2% and contributed -0,8 of a percentage point to GDP growth. The decrease was mainly because of a drop in the production of field crops and horticultural products,” said Stats SA
Stats SA added that the transport and communications industries were also at a low, contributing significantly to the fall of the GDP.
“The transport, storage and communication industry decreased by 4,9% and contributed -0,4 of a percentage point to GDP growth. Decreases were reported for land transport, air transport and transport support services.
"The trade, catering and accommodation industry decreased by 1,9% and contributed -0,3 of a percentage point to GDP growth. Decreased economic activity was reported in the retail and motor trade divisions,” added the organisation.
They however said mining, finance and real estate realized a favorable increase over the period.
“In contrast, mining increased by 4,9% and contributed 0,4 of a percentage point to GDP growth, and finance, real estate and business services increased by 1,9% and also contributed 0,4 of a percentage point to GDP growth,” added Stats SA.
Speaking to The Southern Times, economic analyst Paro Lindie said the country’s economy has been stung by a number of factors which have negatively impacted on growth.
“The situation is not something that can be corrected overnight. If Ramaphosa and his government are in any way going to be able to revive this economy, investor confidence needs to be retained. A lot has happened in the political realm and resulted in investors holding back their money and effort.
Corruption has hampered economic growth as well the issue of land which in a way has left a lot of questions unanswered and the economy unstable. I don’t know how the Reserve Bank will handle the issue of interest rates given the current situation,” said Lindie.
Stats SA said the unadjusted real GDP at market prices for the first six months of 2018 increased by 0,6 % compared with the first six months of 2017.