South Africa joins global recession
27 May 2009
South Africa has finally joined the long list of economies in recession - the country's first recession in 17 years - according to data released by Statistics SA on Tuesday.
The Pretoria-based agency reported that South Africa's gross domestic product (GDP) growth rate for the first quarter of 2009 stood at -6.4 percent quarter-on-quarter, seasonally adjusted and annualised, compared with a -1.8 percent contraction in the fourth quarter of 2008.
Two consecutive quarters of negative growth mean an economy is technically in recession.
Both a Reuters and a Bloomberg poll had predicted a GDP growth decline of 3.9 percent in the first three months of 2009. Some economists had expected a greater contraction, of just over five percent.
Few were prepared for a 6.4 percent contraction.
The contraction in growth has been blamed on a slump in export demand that has forced both manufacturers and miners to cut production.
According to Statistics South Africa, for the first quarter of 2009, production in mining and manufacturing contracted by -3.3 percentage points and -1.7 percentage points quarter-on-quarter respectively.
The South African Reserve Bank has already cut interest rates four times since December - by a cumulative 350 basis points - in an effort to stave off a prolonged recession.
The Bank's monetary policy committee begins a two-day meeting on Wednesday to discuss further rate cuts.
Sapa
