South Africa is currently experiencing a “technical recession,” after the country’s statistical bureau said real gross domestic product (GDP) decreased by 0.7 percent in the second quarter of the year (Q2 2018).
The nation’s GDP had decreased by 2.6 percent (revised from 2.2 percent) in Q1 2018.
A technical recession happens when a country experiences two quarters of negative growth consecutively.
It is the first time since 2009 that the South African economy — the second largest in Africa after Nigeria — will be going into recession.
This is coming on the heels of South African President Cyril Ramaphosa’s drive to battle dwindling employment rates as well as attract investment as a remedy to boost economic growth.
According to the gross domestic product (GDP), 2nd Quarter 2018 report published by Statistics South Africa on Tuesday, the country’s agriculture sector is the hardest hit, with a decline of 29 percent.
This is due to a drop in the production of field crops and horticultural products, and the impact of drought.
“The largest negative contributor to growth in GDP in the second quarter was the agriculture, forestry and fishing industry, which decreased by 29.2% and contributed -0, 8 of a percentage point to GDP growth,” the report read.
“The transport and communication industry decreased by 4.9% and contributed -0.4 of a percentage point.
“The trade, catering and accommodation industry decreased by 1.9% and contributed -0,3 of a percentage point to GDP growth.
“General government services decreased by 0,5% and contributed -0,1 of a percentage point to GDP growth.
“Finance, real estate and business services increased by 1.9% in the second quarter and contributed 0,4 of a percentage point to GDP growth.
“The mining and quarrying industry increased by 4.9% and contributed 0,4 of a percentage point to GDP growth.”