South Africa's economy falls into recession

0,7% quarterly contraction in GDP in the first three months of 2017

South Africa's economy falls into recession

"For the first quarter, the headline GDP is estimated at a contraction of -0.7% - that is the quarter on quarter seasonally adjusted and annualised growth rate".

Political risks were heightened in March this year when Zuma dismissed respected finance minister Pravin Gordhan, leading to credit ratings downgrades to "junk" status by S&P and Fitch.

South Africa's economy contracted in the first quarter of this year, pushing the continent's largest economy into its first recession since 2009, the official statistics agency reported Tuesday.

The rand immediately lost 1.5 percent against the dollar following the announcement that the economy had fallen into recession. South Africa has experienced seven economic recessions since 1961, the longest occurring over two years, 1991 and 1992, mainly as result of a global economic downturn and the political specificities of South Africa then.

This report updates the May 29 statement by R.P. Tsokolibane, leader of LaRouche South Africa, titled, "Only the Smart Will Survive", in the Documentation section of this Briefing.

Without growth in the primary sector, GDP would have contracted by 2.0 per cent.

Statistics South Africa said weak manufacturing and trade sectors led the recession, with falls of 3.7% and 5.9% respectively.

The most noteworthy feature of the first quarter 2017 data was the recovery in agricultural production.

"This dismal performance was recorded before two worldwide ratings agencies downgraded South Africa's foreign currency debt rating to sub-investment grade during early April, which has knocked confidence levels in the economy further and is expected to keep a ceiling on growth", said Elize Kruger, an economist at NKC African Economics.

TreasuryOne said the GDP figures came in far lower than their expected 0.7% expansion. In 2016, the economy grew only 0.3% for the year.

In contrast the mining and quarrying industry increased by 12.8%, and contributed 0.9 of a percentage point to GDP growth.

Businesses also became more optimistic as they added to their inventories in expectation of higher sales once the record maize crop is harvested.

But, what does the word mean, and how will it affect the average South African?

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