South Africa slides into second year of recession

South Africa’s embattled economy has entered its second recession in two years after its economy shrank by 1.4% in the fourth quarter of 2019. 

The contraction follows an earlier reduction of 0.8% in the third quarter of last year. Overall the economy grew by just 0.2% in 2019, well below the levels needed to reduce South Africa’s record unemployment, which currently stands at about 30%. 

The country is still facing rolling power cuts, which have hampered the manufacturing, agriculture and mining sectors. The black outs are expected to continue for another 18 months, further exacerbating the economic downturn.

The recession will be of further hindrance to President Cyril Ramaphosa’s proposed schedule of reforms, which include slashing the public sector wage bill, rooting our corruption, and revitalising failing state companies. 

The downturn is also likely to affect South Africa’s credit rating, which most ratings agencies have condemned as negative in outlook. Moody’s, one of the only agencies that still views the country’s economy as stable, is due to make an announcement later this month. 

Photo: Bloomberg