South African Economy in Recession as GDP Drops 1.4% in Q4

By Adedapo Adesanya

Records Second Recession since 2018.
Economy Grows 0.2 Percent in 2019.
Nigeria Becomes Biggest Economy in Africa by Comparison

South Africa has entered into a technical recession as the country’s economy contracted by 1.4 percent in the fourth quarter of 2019.

In the latest Gross Domestic Product (GDP) figures released by the statistical authority, Statistics SA (SSA) on Tuesday, the drop in the country’s GDP followed a 0.8 percent decline in economic output during the previous quarter (Q3 2019) and this means with the recession (fall in GDP for two consecutive quarters) marking the third recession experienced by the country since 1994. It is the second recession South Africa was experiencing in two years.

According to the SSA, for the whole of 2019, the South African economy grew by only 0.2 percent in real terms compared with 0.8 percent recorded in the previous year of 2018.

It was revealed that out of 10 major industries that moved the country’s economy, seven were hit with negative outcome in the fourth quarter of last year with agriculture recording the highest with a -7.6 percent outcome.

Others, according to the SSA, include; Transport, -7.2 percent; construction, -5.9 percent; electricity, -4 percent; retail, -3.8 percent and manufacturing, -1.8 percent.

The statistical body, however, revealed that household spending in the country increased by 1.4 percent in the Q4 of 2019.

It has been reported that this means bigger problems for the President Cyril Ramaphosa led government which has been faced with a lot of economic problems and may need to take difficult measures with civil servant wage cuts proposed which could give a boost to the country’s currency, the Rand.

The latest development means Nigeria, which recorded a 2.27 percent growth in 2019, is the biggest economy in Africa, according to a Bloomberg analysis on the basis of its flexible exchange rate ($476 billion or $402 billion), which gives it a higher GDP value than the southern Africa nation ($352 billion).