SA stuck in longest business-cycle slump since 1945

There’s risk that SA may fall into its second recession in a year.
The Reserve Bank forecasts the economy, which hasn’t expanded at more than 2% since 2013, will only achieve 1% growth this year. Picture: Waldo Swiegers, Bloomberg

South Africa’s economy remains stuck in its longest downward cycle since 1945, adding to the risk that it may fall into its second recession in a year.

The economy entered the 67th month of a weakening cycle in June, according to the Reserve Bank’s Quarterly Bulletin released Thursday in the capital, Pretoria. That’s after gross domestic product contracted the most in a decade in the three months through March.

Africa’s most-industrialised economy went through a recession in 2018 and it shrank again in the first quarter of this year as the nation suffered the worst power outages since 2008. While electricity supply from state-owned Eskom has since stabilised, business and factory confidence dropped in May and spending by households, which make up 60% of GDP, remains weak.

The Reserve Bank forecasts the economy, which hasn’t expanded at more than 2% since 2013, will only achieve 1% growth this year.

The only other time that a falling cycle lasted more than 50 months, was between 1989 and 1993, when the former government renewed a state of emergency and the country prepared for its first democratic elections. The central bank monitors about 200 indicators representing economic processes such as production, sales, employment and prices to determine the direction of the trend.

These are some of the other highlights from the Quarterly Bulletin for the three months through March:

  • Foreign direct investment inflows totalled R11.7 billion ($823 million), compared with an outflow of R8.2 billion in the previous quarter.
  • Portfolio investment was R29.2 billion. South Africa relies on these inflows to help fund its current-account deficit, which widened to 2.9% of GDP in the three months through March.
  • Household debt as a ratio of disposable income declined to 72.5% from 72.7%.
© 2019 Bloomberg L.P.

COMMENTS   5

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

Not sure how long the New Dawn has been going but we seem to be going backwards very smartly.

Is it possible that credibility is the issue?

What is the cause of the slump?

What slump? We’re getting a Bullet Train!

“I don’t like people who speak or think in terms of gaining anybody’s confidence. If one’s actions are honest, one does not need the predated confidence of others, only their rational perception. The person who craves a moral blank check of that kind, has dishonest intentions, whether he admits it to himself or not.”

― Ayn Rand, Atlas Shrugged

This is what our President Mr. Ramageddon tried to do at the SONA!

You van fool some of the people some of the time but not all the people all of the time

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.
INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us:

Search Articles:
Click a Company: