S.Africa dodges recession, posts 0.6% growth in Q2
South Africa narrowly avoided slipping into recession in the first half of the year, official data showed on Tuesday, as the economy grew by a meagre 0.6 percent in the second quarter.
Africa’s most advanced economy had shrunk in the first quarter of the year by 0.6 percent, amid a crippling mining strike.
A country is widely considered to be in recession after two quarters running of negative growth.
Growth was helped upward by government spending and a May election, which provided stimulus for the economy.
But other sectors painted a bleak picture of the broader state of the economy.
The main negative contributor was the platinum sector, which suffered a five-month strike that only ended in June. But the affects were felt across the economy.
“It was not only platinum, but poor performance in the gold. Other mining activities as well, overall performed very poorly,” said Statistics South Africa’s Gerhardt Bouwer “it’s actually a combination of all the industries.”
Manufacturing was also negatively affected by “but if you want specific industries that did very badly, the motor and other transport industries did very bad, and also your petroleum and chemical industries.”
Still, the avoidance of a recession will come as a much needed boost to the beleaguered economy, which is overwhelmed with high unemployment, high inflation and vast poverty and inequality.
The country has also been roiled by a rumbling banking crisis that has seen one lender, African Bank, bailed out and the country’s five biggest banks downgraded by credit ratings agencies.
There are fears that South Africa’s own sovereign credit rating could soon be at risk of downgrade, a move that would put pressure on the rand and could push up the cost of borrowing.