Data released on Tuesday, 4 September 2018 by Statistics South Africa showed that South Africa is now in recession. This comes nine years after its last recession in 2009.
To the dismay of President Cyril Ramaphosa who had actively tried to revive the economy after a decade of stagnation, “South Africa’s Lost Decade,” the Economist called it. In Ramaphosa’s first presidential speech, he promised to “turn the tide of corruption, end the plunder of public resources and put behind us the era of diminishing trust in public institutions and weakened confidence in our country’s public leaders.” Unfortunately, he was not able to turn things around on time.
Statistics South Africa stated that the economy contracted by 0.7 percent in the second quarter due to declines in the agricultural, transport and retail sectors.
“We are in a recession. We reported a contraction in the first quarter and now in the second quarter there has been a fall of 0.7 percent,” South Africa’s Statistician-General Risenga Maluleke said.
Ramaphosa’s ascent to office had initially boosted the rand. He had hoped that his optimism, hard work and policies would improve the economy but unfortunately, falling farming output, soft consumer spending and failure to implement quick structural reforms joined forced to plunge the economy into its first recession in nine years. In fairness to Ramaphosa, recession was long coming for Africa’s second largest economy. The country had narrowly escaped recession in 2016 and 2017.
Statistics South Africa said agricultural output fell 29.2 percent in the second quarter, while the transport, communication and storage sector fell 4.9 percent. Mining output on the other hand grew by 4.9 percent and finance by 1.9 percent. Following the release of the data, the rand lost against the dollar to more than 2 percent and government bonds fell.