Photo by: Reuters
South Africa has officially entered a technical recession, after Stats SA announced on Tuesday that the country's real gross domestic product (GDP) had decreased by 0.7% in the second quarter of the year.
This follows a GDP contraction of 2.2% in the first quarter. A technical recession is two consecutive quarters of negative growth.
The largest negative contributors to GDP growth were the agriculture, transport and trade industry. While the mining, finance, real estate and business services industries were the main positive contributors.
Ahead of the announcement in Pretoria, analysts at FNB had been cautiously optimistic that SA could avoid a recession, but said it would be a 'close call'.
The ABSA Purchasing Manager's index for August, released on Monday, was at a 13-month low, reflecting the dire economic situation.
In August, President Cyril Ramaphosa punted his initiative to attract investment as a remedy to boost economic growth to members of Parliament. Cabinet is also working on a stimulus package to reignite growth. The SA Reserve Bank has estimated that the GDP growth will average at 1.2% in 2018.