JOHANNESBURG - South Africa's economy experienced its first technical recession since 2009 after gross domestic product contracted 0.7 percent in the second quarter.
This was after first quarter 2.2 percent decline was revised upwards to 2.6 percent, with Ramaphoria now firmly in the water.
South Africa experienced its last recession during the 2008–2009 global financial crisis with three consecutive quarters of economic decline.
"We are not too surprised that South Africa has slipped into a recession – we have had warning signals of this since the start of 2018 even despite “Ramaphoria” – this is because the financial cycle in South Africa has become bigger, more disruptive on the real economy that most acknowledge," said Mehul Daya, an analyst at Nedbank.
Statistics South Africa said the decline in GDP was led by agriculture production that fell by 29,2 percent in the second quarter of 2018, following a 33,6 percent plunge in the first quarter. "Continued drought conditions in Western Cape and a severe hailstorm in Mpumalanga, resulting in extensive crop damage, also placed additional pressure on production in the second quarter," StatsSA said.
The transport industry contracted by 4,9 percent in the three months ended June, while manufacturing activity fell by 0,3 percent.
The only bright spark in the data was a recovery from the mining sector. However, the muted recovery failed to arrest the decline in GDP.
"Mining’s growth rate of 4,9 percent was largely spurred on by a rise in the production of platinum group metals, copper and nickel."