South Africa Economy Enters Recession In Q2

South African news today

South Africa Economy Enters Recession In Q2

Mining output grew by 4.9 percent and finance by 1.9 percent.

The direction of travel of the economy now means the government can not afford to waste time in implementing market-friendly policies, while it would also do well to jettison those populist policies that diminish the view of South Africa as an attractive investment destination amongst global investors.

Since this development was reported, South Africa's Rand has also been drawing back in the money market, losing against the Dollar since the beginning of the week.

The electricity, gas and water industry increased by 2.1 percent, largely due to an increase in electricity consumed in the second quarter.

A recession is defined as two consecutive quarters of declining gross domestic product (GDP) and points to a prolonged slowdown in economic activity, which stunts job creation and damps investment.

"For a consumer-based economy, where households contribute upwards of 66% to economic growth, this movement is notably worrying", he said.

He says the government must immediately implement changes.

Ramaphosa will have a tough task of restoring investor confidence while reducing poverty, a result of nine years of bad governance during the last few years of former president Jacob Zuma's term.

Consequently, the government has said plans are ongoing to revive the economy before the end of the year as opposition in the country calls for an emergency parliamentary debate.

It comes at the time when lawmakers are reviewing the nation's constitution to make it possible to expropriate land without compensation.

And Arthur Kamp, economist at Sanlam Investments, has warned that low growth lies ahead, with future growth expectations now likely to be revised down.

The bond maturing in 2044 fell one cent to reach the lowest level on record, according to Tradeweb, while the 2041 issue dropped 1.2 cents to set a fresh 2-1/2 month low.

Citadel's Ackerman however, said it would be wrong to lay the blame for poor economic performance on Ramaphosa "as it remains a legacy of ten years of economic mismanagement".

"When the Monetary Policy Committee meets later this month, it will need to leave interest rates unchanged again in view of the weak economy", he noted.

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