Johannesburg, SOUTH
AFRICA
South Africa slipped
into recession in the final three months of 2019, the country's statistics
bureau said on Tuesday, the second contraction to hit the economy in as many
years, which was largely blamed on erratic electricity supplies.
It is the
third recession the continent's most industrialised economy has suffered since
the end of apartheid in 1994, but the second since President Cyril Ramaphosa
came to power in 2018.
The weak
performance piles pressure on Ramaphosa's administration which has struggled to
keep his election pledge to revive economic activity in one of Africa's powerhouses.
Instead,
South Africa remains dogged by high and rising debt, low growth and soaring
unemployment -- and is now at risk of a fallout from the deadly coronavirus
which has affected more than 70 countries worldwide.
Gross
domestic product fell by 1.4 percent in the fourth quarter, after dropping by
0.8 percent in the previous three months, Statistics South Africa said.
This took
growth in Africa's most industrialised country for all of 2019 to just 0.2
percent, its lowest since the global financial crisis in 2009.
Ramaphosa's
government will barely avoid more tumult with the economy officially forecast
to only grow 0.9 percent this year, and as low as 0.5 percent according to
other predictions.
"The
poor growth figures for the last quarter are not pleasing but at the same time
they could not have come as a shock or a surprise to us because the signs were
there," Ramaphosa told journalists in Cape Town.
"It has
been there for all of us to see, the load-shedding (power blackouts) and the
impact it has had on production," he said.
Weak
agriculture output and transport were the main drags on growth in the last
quarter, StatsSA said, followed by construction, mining and manufacturing,
which outweighed positive contributions from finance and government spending.
Seven of the
nation's 10 economic sectors contracted in the fourth quarter, StatsSA said.
"Finance,
mining and personal services managed to keep their heads above water, but this
was not enough to prevent the economy from sliding into its third recession
since 1994," it remarked.
Drought in
parts of the country and floods in others hurt agriculture and power station
output, leading to disruptions in electricity and water supplies.
Recession is
defined as two consecutive quarters of negative growth.
South Africa
previously went into recession in 2008/2009 -- which was prompted by the global
financial crisis -- and then again in 2018.
Growth has
been stunted by, among other issues, rolling electricity blackouts that have
cost the country hundreds of millions of dollars in lost output.
Eskom, which
supplies 95 percent of South Africa's electricity, has been crippled by poorly
designed coal-fired power stations, as well as decades of mismanagement and
alleged corruption under former president Jacob Zuma.
The drop in
the last quarter was significantly worse than market watchers had expected.
The damage
to growth prospects due to power cuts "has been stark", and could not
have come at a worse time "when global headwinds are suggesting that
slower world economic growth is now likely, primarily because of the impact of
the coronavirus on international supply chains," said North-West
University economist Raymond Parsons.
The economy
remains in a "fragile state" and risk of seeing a growth rate of
around 0.5 percent this year, said Investec Bank economist Lara Hodes.
First
National Bank's economist Matlhodi Matsei, said "severely low confidence
levels", load-shedding and disruptions from the spread of COVID-19 cloud
South Africa’s growth outlook.
Although
coronavirus has not yet arrived in South Africa, Ramaphosa acknowledged that
"no doubt we are going to be a candidate".
Opposition
parties have blamed Ramaphosa's government for the economic fall.
The radical
leftist and third largest party, the Economic Freedom Fighters (EFF) warned
South Africans "should soon wake up to the reality and indisputable fact
that the neo-liberal policies of Ramaphosa will continue to worsen the
economic". - AFP
No comments:
Post a Comment