South Africa is another giant on the continent struggling to keep its economy afloat in past couple of years. Reports from its national statistics agency reveal that the economy shrank by 3.2 percent in the first quarter of 2019 – the worst quarterly performance in a decade.
It’s not just a shock drop, it’s a massive one as well given that the initial forecast was for the economy to shrink by 1.6%. The mild relief from the 1.4% growth in the last quarter of 2018 is now a distant story.
Sectors responsible for the drop
Mining and manufacturing were the largest contributors to the unforeseen contraction. The manufacturing industry decreased by 8.8 percent, contributing -1.1 percentage points to GDP growth.
- 7 of the 10 manufacturing divisions reported negative growth rates in the first quarter. They include: petroleum, chemicals products, rubber and plastic products, motor vehicles, parts and accessories, and other transport equipment.
- The mining and quarrying industry contracted by 10.8 percent from the last three months of 2018, contributing a -0.8 of a percentage point to GDP growth.
- Electricity crisis in 2019 with blackouts of up to 12 hours have affected the productivity of the mining and manufacturing industries.
- Agriculture, forestry and fishing industry contracted by 13.2 percent, contributing -0.3 of a percentage point to GDP growth.
- Political tensions also played a part as economic activities slowed leading up to the May 8 elections.