South Africa slips into recession

Just like Nigeria, South Africa has entered recession for the first time in eight years, data from Statistics South Africa showed on Tuesday.
Data from Statistics South Africa in Pretoria showed the first quarter contraction was led by weak manufacturing and trade.
According to the data, South Africa’s economy contracted by 0.7 per cent in the first three months of 2017 after shrinking by 0.3 per cent in the fourth quarter of last year
The worst performing sector was trade, catering and accommodation, which contracted by 5.9 per cent, while manufacturing – one of the key sectors – fell by 3.7 per cent.
Standard Chartered Bank’s Chief Africa Economist Razia Khan said the “awful” data showed weakness where it was not expected.
The value of the rand fell by 1 per cent on the currency markets, the BBC reported Tuesday afternoon, adding that analysts had expected GDP to grow by 0.9 per cent during the first quarter.
Commenting on the development, Joe de Beer, deputy director general of Statistics South Africa, said: “We can now pronounce that the economy is in recession.”
“The major industries that contracted in the economy were the trade and manufacturing sectors,” he added.
According to analysts, the contraction suggested high unemployment and stagnant wages were dragging down South Africa’s long-resilient consumer sector.
“The slowdown in first quarter was due to much worse results from usually stable consumer-facing sectors that had been the key drivers of growth in recent years,” Capital Economics Africa economist John Ashbourne said.
Political instability, high unemployment and credit ratings downgrades were said to have dented business and consumer confidence in South Africa and the rand extended its losses against the dollar, while government bonds also weakened.
South Africa’s Treasury said it would work to finalise policies critical for boosting confidence and economic growth.
The Nigerian economy has been in recession since 2016 with analysts forecasting the West African country will be out of recession by the third quarter of 2017.
Nigeria and South Africa are two of Africa’s largest economies.