- South Africa’s economy entered a recession for the first time in nearly a decade.
- Gross domestic product fell 0.7% in the second quarter, dragged down by weak performance in the agricultural sector.
- The South African rand plunged more than 2% following the report.
South Africa’s economic growth slowed unexpectedly in the second quarter, pushing the country into a recession for the first time since 2009.
Gross domestic product in Africa’s most developed economy fell by 0.7% from April to June, the national statistics agency said in a report Tuesday, compared with expectations for 0.6% growth. That followed a 2.6% contraction in the previous quarter.
The contraction was partly driven by weak performance in the South African agricultural sector, which declined by 11% after a major drought affected parts of the Western Cape earlier this year. Meanwhile, the trade and transport sectors also saw output declines.
Jason Tuvey, a senior emerging markets economist at Capital Economics, said he expects economic conditions to improve over the rest of this year.
“Today’s data will further dent hopes that Cyril Ramaphosa’s presidency would lead to a marked turnaround in South Africa’s economic fortunes,” Tuvey said.
The South African rand, which has been under pressure throughout the last several months, extended losses following the report. The currency fell as much as 2.6% to 15.2268 against the dollar. Yields on rand-denominated government bonds spiked 22 basis points to 9.22%, the highest level since Ramaphosa was elected leader of the ruling African National Congress in December.
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