The dire economic outlook for South Africa has taken a turn for the worse following a recent briefing by Statistics South Africa, where the country has slipped into a recession. This marks the second time the country has entered such an economic state in three years, with it previously happening in 2018.
Stats SA explained its findings in a report where the nation’s GDP contracted in consecutive quarters, which is why it has fallen into a recession.
Looking closely at the figures, Stats SA says the GDP contracted by 1.4 percent in Q4 of 2019, with it following a revised contraction of 0.8 percent in Q3.
As such it makes the expected downgrade by international rating agencies later this month all the more certain.
Unsurprisingly the increased loadshedding has had a significant impact in terms of the GDP, and in particular seen several industries fail to show signs of growth. The manufacturing industry for example has severely hit, with South Africa manufacturing less motor vehicles, as well as a slow down in the production of materials like wood and paper.
Agriculture too fell sharply in the latest quarter by 7.6 percent, with heatwaves and late rains being two factors in that region, according to Stats SA.
The only industry to seemingly stem the tide was finance, with it increasing by 2.7 percent in the quarter. This is as expected, given that it is one of the few sectors in the country which has performed steadily over the past decade.
Either way the current economic state makes for grim reading, and once the aforementioned ratings downgrades are announced later this month, we should an even better idea of just how large the challenges facing the country are.
For now though, there is little to inspire confidence.