South Africa slipped into recession in the final three months of 2019 , the country’ s statistics bureau said on Tuesday, the second contraction to hit the economy in as many years.
It is the third recession the continent ’ s most industrialised economy has suffered since the end of apartheid in 1994, but the second since Cyril Ramaphosa came to power in 2018 .
The weak performance piles pressure on Ramaphosa’ s administration which has been struggling to keep his election pledge to revive economic activity in one of Africa ’ s powerhouses .
Instead , South Africa remains dogged by high and rising debt , low growth and soaring unemployment.
Gross domestic product fell by 1 . 4 percent in the fourth quarter, after dropping by 0 . 8 percent in the previous three months , Statistics South Africa said .
This took growth in Africa ’ s most industrialised country for all of 2019 to just 0 . 2 percent, its lowest reading since the global financial crisis in 2009 .
Ramaphosa’ s government will barely avoid another bout of economic tumult with the economy forecast to only grow 0 . 9 percent this year .
Weak agriculture output and transport were the main drags on growth in the last quarter, StatsSA said , followed by construction , mining and manufacturing , which outweighed positive contributions from finance and government spending.
Seven of the nation ’ s 10 economic sectors contracted in the fourth quarter, StatsSA said .
“ Finance, mining and personal services managed to keep their heads above water, but this was not enough to prevent the economy from sliding into its third recession since 1994, ” it remarked .
Drought in parts of the country and floods in others hurt agriculture and power station output , leading to disruptions in electricity, gas and water supplies .
– Most sectors contracted –
Recession is defined as two consecutive quarters of negative growth .
South Africa previously went into recession in 2008 /2009 — which was prompted by the global financial crisis — and then again in 2018.
Growth has been stunted by , among other issues , rolling electricity blackouts that have cost the country hundreds of millions of dollars in lost output .
Eskom, which supplies 95 percent of South Africa ’ s electricity, has been crippled by cash shortages and poorly designed coal – fired power stations, as well as decades of mismanagement and alleged corruption under former national president Jacob Zuma .
The drop in the last quarter surprised market watchers .
“ While a contraction was largely expected, the decline exceeded market expectations , demonstrating how extensively the electricity crisis in SA continues to plague the economic prospects of the country, ” market pundit group , Peregrine Treasury Solutions said in a note.
The government has repeatedly bailed out Eskom and other state – owned enterprises including the national carrier South African Airways .
“ Freeing the economy from the dead – weight of a failing state will provide South Africa ’ s struggling economy with the antidote needed to arrest the terminal decline and put the country on a sustainable path of economic growth , ” said Geordin Hill – Lewis, a lawmaker with the largest opposition party , the Democratic Alliance.
The International Monetary Fund last year urged more “ decisive” reforms to boost private investment in South Africa , forecasting economic growth to remain sluggish for a sixth consecutive year in 2020 .
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