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S Africa’s economy contracts 2nd time in 8 years

by ChemOrbis Editorial Team - content@chemorbis.com
  • 06/06/2017 (15:27)
According to media reports, South Africa’s GDP decreased by 0.7% in Q1 of 2017 quarter-on-quarter due to the ongoing political uncertainty in the country. This was the second time the country’s economy contracted in eight years after it shrank by 0.3% in the previous quarter. The latest GDP result also stood below the estimates of an expansion of 1%.

The data from the country’s statistics office showed that all sectors except agriculture and mining shrank in Q1 while the finance, real estate and business services contracted for the first time since the Q1 of 2013 by 1.2%.

Economists argue that the contraction might extend to the next quarters as rating companies downgraded the country’s credit to the “highest non-investment” grade due to policy uncertainty, political turmoil and slow economic growth. The central bank also decreased its growth estimate for 2017 to 1% from 1.2% and its outlook for 2018 to 1.5% from 1.7% due to the possible impacts of the downgrades.
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