A corrupt black ANC regime has sent the country reeling amid concerns of land expropriation without compensation, with the Rand tumbling. Broad emerging market fears may have contributed to the slide, but the local economy is being pressured further by collapsing consumer spending, Bloomberg reported.
This follows a GDP contraction of 2.2 percent in the first quarter, and two consecutive quarters of negative growth. Stats SA said Q2 GDP contracted at a 0.7 percent annualised rate, missing expectations of a 0.6 percent increase, and together with the sharp drop in Q1 GDP.
South Africa’s new President Cyril Ramaphosa in his first six months in office, has managed to wipe out confidence with his continuous threats of land theft. White farmers expect that they will not be allowed to keep their land and will have their land forcibly expropriated soon. The land grabs have already started in the most northern province, Limpopo.
The decline was thus largely due to a collapse in agriculture and the farming sector and a parallel drop in consumer spending. Agriculture declined the most, recording an annualized 29.2 percent contraction.
“This [decrease in agriculture] was largely driven by a decline in the production of field crops and horticultural products,” said Stats SA in a media statement.
Manufacturing shrank, trade contracted and only the mining sector production expanded 4.9 percent Q/Q.
Ahead of the announcement in Pretoria, analysts at one of the four large banks had been cautiously optimistic that South Africa could avoid a recession, but said it would be a “close call”. The rand fell sharply against the dollar in Johannesburg on Tuesday.
Government expenditure, meanwhile, grew by 0.7 percent, Fin24 reported.
