South Africa is in its first technical recession in nine years.
Stats SA announced on Tuesday that the country’s real gross domestic product contracted by 0.7% in the second quarter of 2018. This follows a revised fall of 2.6% in the first quarter of the year.
Here are 10 things you need to know according to the report:
- The country’s agriculture sector was the hardest hit, with a decline of 29% in the second quarter of 2018. It contributed -0.8 of a percentage point to GDP growth. Stats SA says the decrease was mainly due to a drop in the production of field crops and horticultural products, and the impact of drought.
- Transport and trade were the sectors that were the second hardest hit. The national statistic service reported that the transport, storage and communication industry contracted by 4.9%, contributing -0.4% of a percentage point the GDP. Meanwhile the trade, catering and accommodation industry decreased by 1.9% and contributed -0.3 of a percentage point.
- Positive contributions to GDP came from the mining industry as well as the finance, real estate and business services sectors.
- Net exports also contributed positively to growth in expenditure on GDP, with exports of goods and services up 13.7%. This was largely influenced by increased trade in precious metals, mineral products and vegetable products. Imports increased by 3.1%.
- Expenditure on real gross domestic product decreased by 0.9% in the second quarter of 2018, following a decrease of 2.6% in the first quarter of 2018.
- Household final consumption expenditure decreased by 1.3% in the second quarter of 2018, contributing -0.8 of a percentage point to total growth. This was the first quarter-on-quarter decrease since the first quarter of 2016.
- Government final consumption expenditure increased by 0.7%, contributing 0.1 of a percentage point.
- Gross fixed capital formation decreased by 0.5%, contributing -0.1 of a percentage point.
- The manufacturing industry contracted by 0.3% in the second quarter. The majority of the 10 manufacturing divisions reported negative growth rates in the second quarter. The largest contributors to the decrease were the motor vehicles, parts and accessories and the furniture and ‘other’ manufacturing divisions.
- The rand immediately fell on news of the recession, compounding its earlier losses. After opening the day at R14.85/$ on Tuesday, it was trading at R15.22/$ at 13:05, down 2.4% on the day.