Africa’s second largest economy, South Africa, has fell into its first recession since 2009 during the first half of the year, despite optimism over Cyril Ramaphosa replacing the corruption-hit Jacob Zuma as president.
This is a stinging blow to President Cyril Ramaphosa’s efforts to revive the economy after a decade of stagnation. Statistics South Africa said the economy contracted by 0.7 percent quarter-on-quarter, led by declines in the agricultural, transport and retail sectors. Output in sub-Saharan Africa’s most industrialised economy fell by 0.7 per cent in the second quarter, a much worse reading than the 0.6 per cent rise that was forecast by economists
The decline came on top of a 2.6 per cent contraction during the first three months of 2018, a figure that was revised from a 2.2 per cent fall. The South African rand fell over 2 per cent against the US dollar following the data release, hitting its lowest level since early 2016. The rand has fallen 19 per cent this year, the last 18 days contributing more than half of that decline as debate about land reform intensified.
South Africa’s return to recession underscores the challenge Mr Ramaphosa faces in turning around a long period of stagnation under Mr Zuma, who was forced out of office earlier this year. Mr Ramaphosa, a trade union leader turned tycoon who won a struggle for power with Mr Zuma for control of the ruling African National Congress, has pledged a “new dawn” for the economy, including a campaign against corruption in government. South Africa’s economy has failed to grow more than 2 per cent a year since 2013. It faces serious structural obstacles such as unemployment of more than 27 per cent.
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