South Africa Enters Recession as Economy Shrinks 0.7%
By Modupe Gbadeyanka
South Africa has slumped into recession, almost a year after its rival, Nigeria, dropped into a similar situation, which it is still battling to recover from.
Nigeria lost its position as the biggest economy in Africa to South Africa after it went into recession last year.
Lately, the former Apartheid nation has been struggling with its economy and this led to it being downgraded by both Fitch and Standard & Poor’s.
The economy began to shake especially after President Jacob Zuma fired his Minister of Finance, Mr Pravin Gordhan, who is believed to be a key driver to the growth of the country’s economy.
On Tuesday, the official statistics agency of South Africa, Stats SA, said the country’s economy contracted in the first quarter of 2017 by 0.7 percent.
“The South African economy moved into recession with the reported decrease of 0.7 percent in GDP (gross domestic product) during the first quarter of 2017, following a 0.3 percent contraction in the fourth quarter of 2016,” the agency said in its report.
This is the first time South Africa was going into recession since 2009.
According to Stats SA, the manufacturing sector declined by 3.7 percent as unemployment climbed to a record 27.7 percent.
It explained that the trade, catering and accommodation industry was the biggest contributor to the negative GDP growth, depreciating by 5.9 percent and accounting for -0.8 of a percentage point to GDP growth.
Only the mining and agriculture sectors posted growth rates of 12.8 percent and 22.2 percent respectively in the first quarter.