South Africa slips into recession as economy shrinks

Record ID: 878384

  • Title: South Africa slips into recession as economy shrinks
  • Date: 6th June 2017
  • Summary: JOHANNESBURG, SOUTH AFRICA (FILE) (REUTERS) VARIOUS OF PEOPLE USING ATM MACHINES JOHANNESBURG, SOUTH AFRICA (APRIL 4, 2017) (REUTERS) STANDARD BANK SIGN WIDE OF JOHANNESBURG STOCK EXCHANGE FINANCIAL INDICATORS
  • Embargoed: 20th June 2017 15:05
  • Keywords: south africa unemployment markets economy recession
  • Location: JOHANNESBURG / DURBAN / CAPE TOWN, SOUTH AFRICA
  • City: JOHANNESBURG / DURBAN / CAPE TOWN, SOUTH AFRICA
  • Country: South Africa
  • Topics: Economic Events
  • Reuters ID: LVA0026K549XJ
  • Aspect Ratio: 16:9
  • Story Text: South Africa slipped into technical recession for the first time since 2009 after the economy contracted in the first quarter, led by weak manufacturing and trade sectors, Statistics South Africa said on Tuesday (June 6).
    Africa's most developed economy contracted by 0.7 percent in the first quarter after shrinking by 0.3 percent in the fourth quarter of last year, the statistics agency said.
    It was the first time two consecutive quarters showed contraction - a definition of recession - since the second quarter of 2009, although there have been individual quarters of so-called negative growth in more recent years.
    Economic analyst, Xhanti Payi told Reuters that domestic factors surrounding political stability have been a contributing factor to the recession.
    Ratings agencies S&P Global Ratings and Fitch last week said risks to ratings include weak economic growth and political uncertainty ahead of the ruling African National Congress (ANC) conference in December when a successor to President Jacob Zuma as party leader will be chosen.
    Political risks were also heightened in March this year when Zuma dismissed respected finance minister Pravin Gordhan, leading to credit ratings downgrades to "junk" status by S&P and Fitch.
    The poor growth numbers will pile more pressure on the government to get the economy back on track faster as it aims to stave off further credit ratings downgrades.
    Moody's, whose Baa2 rating is two notches above "junk" is reviewing South Africa for a possible downgrade.
    Pressure on Zuma, including from within the ANC has swelled since the cabinet reshuffle and allegations of influence peddling by some of the president's wealthy friends.
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