The bottom line is that South Africa's economy is in deep trouble and may be falling into a recession, which is defined as two consecutive quarters of economic contraction.
South Africa's economy contracted by 0.2% on a quarter-on-quarter and seasonally adjusted basis in the third quarter (Q3) of 2023, Statistics South Africa (Stats SA) said on Tuesday. This signals that the economy may be falling into a recession.
The 0.2% quarterly contraction in Q3 follows tepid growth of 0.5% in Q2, a downward revision from the initial estimate of 0.6%. On an unadjusted annual basis, gross domestic product (GDP) shrank by 0.7%.
A Reuters poll had forecast smaller declines of 0.1% quarter-on-quarter and 0.2% year on year. The rand responded by falling in the space of an hour to 18.80/dlr from 18.75/dlr when the data were released.
Agriculture, construction, mining and manufacturing had the biggest falls in output -- a worrying trend as these are labour-intensive sectors in an economy with an unemployment rate of over 30%.
"The agriculture industry declined by 9.6%, driven lower mainly by field crops, animal products and horticulture products. The industry encountered several headwinds in the third quarter, including the outbreak of avian flu and the floods in Western Cape," Stats SA said.
Manufacturing output declined by 1.3%, while mining production fell by 1.1%, extending a long-term downward trajectory in the latter sector.
The...