Zuma's ANC dumps our economy into recession - Mmusi Maimane
Jun 06 2017 by Johnny Bowman
The sectors hardest hit were the trade, catering and accommodation industry, which decreased by 5.9 percent, and manufacturing, which decreased by 3.7 percent.
Political instability, high unemployment and credit ratings downgrades have dented business and consumer confidence in South Africa and the rand extended its losses against the dollar, while government bonds also weakened.
Statistics South Africa (StatsSA) announced that South Africa's economy is officially in recession, with GDP growth for Quarter 1 of 2017 down 0.7%, which follows a 0.3% contraction in Quarter 4 of 2016.
Economists polled by Reuters had expected a quarter-on-quarter GDP expansion of 0.9 percent.
This recession - the second in eight years - follows the recent decision by two worldwide rating agencies to downgrade our sovereign rating to "junk status". "From a government perspective, this is likely to put further pressure on revenue collections, which are much-needed funds that are crucial to investing in growth enhancing projects", said Tumisho Grater, an economic strategist at Novare Actuaries and Consultants.
Africa's third-largest economy is under pressure after President Jacob Zuma fired its respected finance minister, Pravin Gordhan, earlier this year. S&P Global Ratings and Fitch last week said risks toSouth Africa's ratings include weak economic growth and political uncertainty ahead of the ANC conference in December when a successor to Zuma as party leader will be chosen.
Meanwhile, South Africa's currency has extended its losses against the USA dollar to more than one percent as the country's sovereign debt also weakened on Tuesday.