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SA economy contracts 1.5% in Q3, more than expected

As July riots hurt sectors like agriculture, manufacturing and trade.
Image: Reuters/Siphiwe Sibeko

South Africa’s economy contracted 1.5% in the third quarter compared with the previous three months, as some of the worst unrest of the post-apartheid era in July hurt sectors like agriculture, manufacturing and trade.

The data released by Statistics South Africa on Tuesday was worse than the forecast of economists polled by Reuters for a 1.2% contraction in the July-September period in seasonally adjusted but non-annualised terms.

Stats SA figures showed the agriculture sector shrank 13.6% quarter on quarter, trade 5.5%, manufacturing 4.2%, mining 0.9% and construction 0.5%. The finance sector grew 1.2% and personal services 0.5%.

The July riots started as sporadic protests by supporters of former president Jacob Zuma after he was arrested for defying an order to testify at a corruption inquiry.

But they broadened into a general outpouring of anger at the poverty and inequality that persist more than two decades after the end of white minority rule in 1994. More than 300 people were killed and thousands of stores damaged in the unrest.

In year-on-year terms the economy grew 2.9% in the third quarter, versus a forecast for 3.5% growth, reflecting a particularly steep slump last year as the Covid-19 pandemic curbed activity. Third-quarter expenditure on gross domestic product fell 1.6% quarter on quarter.

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Where Chinese authorities have to implement drastic measures to cool down their fast-growing economy, the ANC does it by promising to grow the economy and to create jobs.

The more they promise to grow the economy, the faster it crashes. The more “special envoys” the president sends out to lure international investors, the faster local investors flee offshore.

The ANC can teach the Chinese a thing or two about the engineering of a contracting economy.

End of comments.

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