S. Africa might slide into recession

  1. Posted on Wednesday 25 February 2009 - 13:03
    Mernat
    Image of Mernat
    Mernat Mafirakurewa, AfricaNews reporter in Johannesburg, South Africa Photo: Bas Vlugt
    South Africa could have slid into a recession in the last quarter of 2008 as the economy contracted for the first time in a decade, with output sliding 1,8% in the fourth quarter of last year.
    Road trip from Johannesburg to Lehututu, photo by Bas Vlugt
    According to figures released by Statistics SA yesterday, manufacturing was the main culprit behind the steepest fall in output since 1992. Output plunged by a record 21,8% as the deepening global downturn eroded local exports.

    The bigger than expected fall in gross domestic product (GDP) hardened speculation that the Reserve Bank may cut interest rates ahead of its next policy meeting in mid-April.

    “The data serve as the first real sign that the South African economy could be in the midst of a recession," Absa Capital economist Monale Ratsoma told Business Day. “Going into 2009, we project the first quarter figure will show a contraction of around 1,5%," he added.

    A recession is defined as two quarters running of shrinking economic output. Stats SA left its growth estimate for the third quarter unaltered at 0,2%, but that could change in the future.

    “With the economic growth outlook deteriorating further following today’s figures and adding to that the expected drop in inflation, the Bank has ample scope to cut interest rates more aggressively," said Elize Kruger, economist at Thebe Securities.

    Market consensus forecasts had predicted the economy would contract 1,2% in the fourth quarter of last year, seasonally adjusted and annualized. Compared with the same quarter in 2007, GDP rose by an unadjusted 1%, sharply down from 3% in the third quarter.

    Electricity production curbed output, falling 2,7% in the fourth quarter. Retail sales eased a modest 0,2%, still marking the third successive quarter of contraction. The sector is the economy’s third biggest, and has been hardest hit by soaring inflation and higher interest rates, which have boosted debt costs and eroded incomes.

    Mining output nudged up 0,4% after diving 8,8% in the third quarter of the year. But two of the smallest sectors helped offset bad news elsewhere. Construction leapt 10,8% in the fourth quarter, supported by state infrastructure plans.

    Analysts said the figures highlight SA’s dependence on the world economy, and also suggest that the risk of slipping into recession has probably increased sharply.

Latest News

  1. OPINION: Welcome to African Green Revolution24/05For the past century and a half, Africa has tried various agricultural approaches without much success.
  2. Egyptians vote in historic election23/05Egyptians began voting freely on Wednesday for the first time to pick their president in a wide open election that pits Islamists against men who serv…
  3. Africa Day 2012 - a moment for reflection and…22/0525th May is Africa Day. For many years it has been a celebration of African unity. It dates back to 1963 when the Organisation of African Unity (OAU) …
  4. South Africa's African agenda21/05The Deputy President of the Republic of South Africa, Kgalema Mothlanthe paid a rare visit to Ghana in April at the invitation of John Dramani Mahama …
  5. Women struggle to rinse hunger, poverty stains21/05Just looking at her one clearly appreciates that she is old and frail therefore in need of support for food, clothing and shelter to live comfortably …
  6. Climate Climate change affects migratory birds…21/05Changes in the climate globally have affected the movement of both migratory and resident species of birds, Nature Uganda has said.
  7. Ghana: Foreign retailers cited for currency…18/05The Ghana Union of Traders Association (GUTA) is attributing the sharp depreciation of the Ghana cedi against major currencies to the illegal activiti…
  8. Kenya: Community radio brings succour to…18/05Korogocho, a slum in northeastern Nairobi with 100,000 inhabitants, had many of the ingredients for a political explosion similar to those that rocked…
  9. Veld fires 'flame' Zimbabwe's…16/05Over the years, Zimbabwe has experienced the scourge of veld fires destroying property worth thousands of dollars.
  10. Liberia commends ECOWAS for support14/05The induction training of pioneer Economic Community of West African States (ECOWAS) Volunteers for Liberia kicked off in Monrovia, with the Deputy Mi…
  11. Vanishing Lake Chad puts 30m lives at risk14/05As you approach the Lake Chad basin from Maiduguri, in north-eastern Nigeria, the evidence of despair is telling.
  12. Heavy rains cause havoc in Kenya14/05Heavy Rainfall continued to wreak havoc across the country leading to the suspension of relief food in some parts of the country as most roads in Turk…
  13. Zimbabwe: Growth points lie dormant14/05The Zimbabwean government mooted the concept of growth points in the 1980s as a means of decongesting cities and towns.
  14. Sierra Leone improves in infant mortality11/05Sierra Leone has improved in infant mortality cases according to Save the Children- World Motherhood index 2012 report. The West Africa country descri…
  15. Zimbabwe: Resettled farmers fail to utilize…10/05Resettled farmers in Zimbabwe are failing to utilize land due to inadequate farming inputs and lack of resources.
News archive