South African economy contracts 0.6% in third quarter
JOHANNESBURG - South Africa’s gross domestic product contracted 0.6% in the third quarter, following a revised 3.2% expansion in the second quarter, data from Statistics South Africa showed on Tuesday.
Africa’s most advanced economy has struggled to emerge from a deep slump in the nearly two years since President Cyril Ramaphosa took the helm with promises to reform.
The latest data will pile on the pressure, particularly from ratings agencies which have flagged weak growth as a major risk, and investors weary of increasing state debt as revenues slide.
Economists polled by Reuters had predicted an expansion of 0.1% in quarter-on-quarter and seasonally adjusted terms in the latest three-month period.
The rand reacted negatively to the surprise shrinkage, falling soon after the release to trade down 0.8% against the dollar on the day.
GDP grew 0.1% year on year in the third quarter, also below economists’ forecasts for growth of 0.4% and below second-quarter growth of 0.9%.
Finance Minister Tito Mboweni in October slashed the 2019 growth forecast to 0.5%.
Sharp dips in mining, manufacturing and agriculture were the largest contributors to the negative growth in the third quarter, with agriculture affected by a severe drought which has forced government to begin rationing water supplies nationwide.
“Both primary and secondary industries have gone on a slump in this quarter … Mining, manufacturing transport and communication all contributed (to negative growth). The primary sector slumped 5.5%, and in agriculture we saw that particularly in the area of field crops,” said Statistician General Risenga Maluleke.
Mining production fell 6.1% in the quarter, manufacturing was down 3.9% and agriculture contracted by 3.6%. The three taken together represent about a quarter of domestic product and a large chunk of taxes, revenues and employment.