South Africa’s battered economy has entered its second recession in two years. It shrank by 1.4% in the fourth quarter of 2019.
This follows a further 0.8% contraction in the third quarter of last year. The country continues to battle persistent power cuts which have hampered manufacturing, agriculture and mining.
The latest contraction was larger than many economists had projected.
The figures show that the economy only grew by 0.2% in the whole of last year, well below the levels needed to put a dent on South Africa’s record unemployment, which is hovering around 30%.
Power cuts are expected to continue for another 18 months, meaning South Africa’s economic woes will continue.
The recession will further complicate President Cyril Ramaphosa’s reform agenda, which includes slashing the public sector wage bill, rooting out corruption and turning around failing state companies.
The news of South Africa’s recession will dampen any hopes of the country avoiding a ratings downgrade.
Moody’s is the only ratings agency that still has South Africa above junk status and it is due to make an announcement later this month.