2018.09.0407:34:00UTC+00South Africa Economy Enters Recession In Q2

South Africa's economy contracted for a second straight quarter during the three months to June, thus entering a recession, a first in nearly a decade.

Gross domestic product shrunk a seasonally adjusted and annualized 0.7 percent quarter-on-quarter, Statistics South Africa said Tuesday.

That was smaller than the 2.6 percent contraction seen in the first quarter, which was revised from 0.8 percent reported earlier.

Two consecutive quarters of GDP contraction suggests a technical recession.

South Africa experienced its last recession during the 2008-2009 global financial crisis with three consecutive quarters of economic decline, the statistical office said.

The latest downturn was a result of a fall-off in activity in the agriculture, transport, trade, government and manufacturing industries.

Farm output plunged 29.2 percent after a 33.6 percent slump in the first quarter. The massive fall was led by a decline in the production of field crops and horticultural products as well as continued drought conditions in some regions.

Decreased activity in both land and air transport caused a 4.9 percent contraction in the transport industry. This was worsened by industrial action and a decline in freight transport.

The trade industry shrunk for a second straight quarter with output falling 1.9 percent. Subdued sales in both motor and retail trade were to blame for the downturn.

Manufacturing also contracted for a second quarter in a row, down 0.3 percent. This was led by a fall in the production of electrical machinery, transport equipment including motor vehicles, and products within the furniture and 'other' manufacturing division.

Positive growth was witnessed in mining, construction, electricity, finance and personal services. However, that was not enough to lift overall economic growth out of negative territory, the agency said.

Survey data from the BER showed on Monday that the Absa Purchasing Managers' Index declined to 43.4 in August from a solid 51.5 points recorded in July. This is the lowest level in just over a year.

The deterioration was driven by sharp declines in the new sales orders index as well as the business activity index, the survey said.