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SA GDP up year-on-year, but enters recession

The 0.7% quarter-on-quarter decrease means the country has entered a technical recession.

Sandton, South Africa's financial capital. Picture: Aki Anastasiou/EWN

JOHANNESBURG - Stats SA has announced that South Africa’s gross domestic product (GDP) growth rate is at 1% on a year-on-year basis. However, the 0.7% quarter-on-quarter decrease means the country has entered a technical recession.

Recently, agencies S&P Global and Fitch kept their ratings unchanged but cited concerns of poor growth.

South Africa last entered a technical recession in 2009.

The largest negative contributor to growth in GDP in the first quarter was the trade, catering and accommodation industry, which decreased by 5.9% and contributed -0.8 of a percentage point to GDP growth.

The manufacturing industry contracted by 3.7% and contributed -0.5 of a percentage point to GDP growth. Seven out of ten divisions reported negative growth rates in the first quarter. The largest contributor to the decrease was the petroleum, chemical products, rubber and plastic products division.

In contrast the mining and quarrying industry increased by 12.8% and contributed 0.9 of a percentage point to GDP growth.

The agriculture, forestry and fishing industry rebounded in the first quarter of 2017 on the back of eight consecutive quarters of contraction. The industry’s increase of 22.2% in the first quarter of 2017 was mainly as a result of increases in the production of field crops and horticultural products.