The 0.7percent contraction in the Gross Domestic Product (GDP) in the first quarter of this year was worse than expected and could jeopardise the government’s projections of a 1.3percent GDP growth, the National Treasury said yesterday.

Statistics South Africa yesterday released the GDP figures which has seen the country fall into a technical recession, following a 0.3percent drop in the last quarter of last year.

“This worse-than-expected GDP outcome introduces significant downward bias to the GDP growth estimates that have been communicated in the 2017 Budget Review, which projected a 2017 GDP growth of 1.3percent,” the National Treasury said.

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But the department said that despite the GDP contraction, the country could still boost the economic growth outlook. This could be achieved - among others - through the benefits from improving global growth; the stabilising of commodity prices; more favourable climate conditions; a reliable electricity supply in the country, and less volatile labour relations.

“The current growth rate, if sustained, will lead to a further decline in GDP per capita and revenue, which will be risking the sustainability of our fiscal framework and will - more importantly - be undermining the delivery of social services.

"The current state of the economy puts more pressure on us as government, business, labour and broader society to intensify our growth programme and improve confidence as a matter of urgency to arrest the decline and set the economy on a higher growth trajectory,” the department said.