Update-South Africa enters recession as economy shrinks 0.7% in Q1 2017

South Africa’s economy contracted in the first quarter of 2017, pushing the continent’s second largest economy into its first recession since 2009, according the country’s official statistics agency Tuesday, AFP reports.

“The South African economy moved into recession with the reported decrease of 0.7 percent in GDP (gross domestic product) during the first quarter of 2017, following a 0.3 percent contraction in the fourth quarter of 2016,” said Stats SA.

The biggest contributor to the negative GDP growth were the trade, catering and accommodation industry, which shrank by 5.9 percent and accounted for -0.8 of a percentage point to GDP growth.

The manufacturing sector decreased by 3.7 percent as unemployment climbed to a record 27.7 percent, the highest unemployment rate in 14 years.

Only the mining and agriculture sectors posted growth rates of 12.8 percent and 22.2 percent respectively in the first quarter.

South Africa’s economy has been experiencing weak growth in recent years.

In April it lost its investment grade when the world’s two major rating agencies Fitch and Standard & Poor’s downgraded its sovereign debt to junk status after President Jacob Zuma’s dramatic ministerial shake-up that saw respected finance minister Pravin Gordhan axed.

The two ratings firms cited political and economic instability as grounds for the downgrades.

Courtesy AFP