South Africa’s economy enters into another technical recession for the second time in two consecutive years
On a quarter-on-quarter basis, real GDP growth contracted by 1.4% in the fourth quarter of 2019. The decline of GDP by 0.8% (downwardly adjusted from -0.6%) during the third quarter of 2019 suggests that the South African economy was in a technical recession in H2 2019. As such, since the great recession of 2008/09, South Africa has experienced two technical recessions, both of which took place during the past two years. GDP growth only registered a positive print during Q2 in 2019. Today’s poor GDP results were largely expected as activity was muted throughout the fourth quarter, with the rolling electricity cuts (load shedding) acting as the main headwind to the economy.
The Q4 2019 GDP figure therefore means that GDP contracted for 2019 as a whole, declining from 0.8% in 2018 to a measly 0.2% in 2019. As the year progressed into 2019, prospects of a recovery in growth had diminished on the back of Eskom’s inability to supply adequate electricity, further denting an already fragile business confidence.
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