South Africa has fallen into second recession in a decade after economic growth dipped by 0.7% between January and March. Value of Rand, the country’s currency, also fell by 1% on the currency markets on Tuesday.
Weak manufacturing and trade follows a 0.3% fall in GDP in the final quarter last year. Analysts had expected GDP to grow by 0.9% during the first quarter. Joe de Beer, Deputy Director General of Statistics South Africa, told BBC: “We can now pronounce that the economy is in recession.”
“The major industries that contracted in the economy were the trade and manufacturing sectors.” Africa’s third-largest economy is under pressure after President Jacob Zuma fired its finance minister, Pravin Gordhan, earlier this year.
This prompted two credit rating agencies, Standard and Poor’s and Fitch, to downgrade South Africa’s credit worthiness to junk.
They also 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.Currently, it is more expensive for South Africa to borrow money, because it is seen as having a higher risk defaulting on its debts.