South Africa falls into second recession in a decade
South Africa has fallen into
recession for the first time in eight years after economic growth shrank
by 0.7% between January and March.
The downturn, due to weak manufacturing and trade, follows a 0.3% fall in GDP in the final quarter last year.
It
is the first time that economic has slowed for two consecutive quarters
- the technical definition of a recession - since 2009.
The value of the rand fell by 1% on the currency markets.
Analysts
had expected GDP to grow by 0.9% during the first quarter. However, Joe
de Beer, deputy director general of Statistics South Africa, said: "We
can now pronounce that the economy is in recession."
He added: "The major industries that contracted in the economy were the trade and manufacturing sectors."
Junk status
Africa's
third-largest economy is under pressure after President Jacob Zuma
fired its respected finance minister, Pravin Gordhan, earlier this year.
It prompted two credit rating agencies, Standard and Poor's and Fitch, to downgrade South Africa's credit worthiness to junk.
This
means it is more expensive for South Africa to borrow money, because it
is seen as having a higher risk defaulting on its debts.
Last
week, S&P and Fitch pointed to further concerns about the South
African economy, including uncertainty over who will succeed President
Zuma as leader of the ruling African National Congress.
A successor is expected to be chosen in December, but Mr Zuma can remain as head of state until an election in 2019.
BBC
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