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South African growth weakens to post crisis low

South African growth weakens to post crisis low

South Africa

South Africa’s economic growth declined to the slowest rate since 2009 in the fourth quarter of 2015, as the commodities rout continued to weigh heavily on the mining-focused economy.

GDP expanded just 0.6 per cent in the last three months of 2015 from the previous quarter, below forecasts of 0.9 per cent growth and a slowdown from the 0.7 per cent rate of expansion seen in the third quarter.

Year-on-year growth slowed to 0.6 per cent from 1 per cent in the third quarter, the slowest rate of expansion since 2009.

More sluggishness is expected in 2016 as a severe drought persists and global demand for South African exports including gold and other metals remain depressed.

The government forecasts growth of 0.9 percent this year compared with an estimated 1.3 percent in 2015, which would be the lowest rate of expansion since South Africa emerged from a recession in 2009.

Investors are also nervous about economic policymaking after Zuma’s sudden firing in December of finance minister Nhlanhla Nene in favour of a relatively unknown lawmaker precipitated a plunge in the rand and other South African assets.

To halt the sell-off, Zuma brought back Pravin Gordhan as his third finance minister in a week, but recent media reports have suggested a rift between the president and Gordhan, who won investors’ respect during a previous stint in the job.

Gordhan outlined an austere budget last week that was aimed at avoiding credit rating downgrades but which failed to reassure investors.

Zuma, who faces his second no-confidence vote in a year on Tuesday over what the opposition Democratic Alliance called his reckless handling of the economy, has denied he and Gordhan are at war.

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