South Africa economy contracts 3.2pc in Q1

South Africa’s economy dramatically shrunk in the first quarter of 2019, the country’s statistics authority said Tuesday, piling pressure on President Cyril Ramaphosa’s newly elected administration. According to Stats SA, gross domestic product (GDP) for Africa’s most developed economy contracted 3.2 per cent in the first three months of the year compared to the previous quarter, the largest quarterly drop in about 10 years.

The slump is in contrast to the 1.4pc growth seen in the fourth quarter of 2018 and comes in far below the 1.6pc decline generally predicted by analysts. The slip was driven mainly by declines in agriculture, manufacturing and mining sectors which saw a drop of 13 percent, 8.8pc and 10.8pc respectively. Exports fell 26.4pc in the quarter, while imports dropped 4.8pc. Ramaphosa, who held onto office in May when the ANC party won the national election, has vowed to revive the economy by attracting $100 billion (88 billion euros) in foreign investment and by fighting corruption.

Main opposition Democratic Alliance leader Mmusi Maimane said the contraction was proof that the country “continues to move backwards and there is a need for reform”. Peregrine Treasury Solutions’ corporate manager Bianca Botes said it was “the biggest decline in GDP since the 2008 financial crises” and that the contraction highlighted the “dire state of the South African economy.”

After the data was released, the rand weakened as much as 1.32pc against the dollar to 14.64, down from 14.45 at the opening of trade. Ramaphosa will deliver his State of the Nation address later this month as South Africans and investors focus on soaring fuel prices and stubbornly high unemployment.