South Africa: Economy swings to contraction in Q2
August 25, 2015
In the second quarter, the economy contracted 1.3% over the previous quarter at a seasonally adjusted annualized rate (SAAR). The reading contrasted the 1.3% expansion seen in the first quarter and marked the lowest reading in over a year. Q2’s contraction also contrasted the 0.5% expansion the markets had expected. Moreover, in annual terms, GDP expanded 1.2%, which came in below the 2.1% expansion recorded in the previous quarter.
Q2’s slowdown came on the back of a contraction in mining and quarrying, which dropped 6.8% (Q1: +10.2% quarter-on-quarter SAAR). In addition, manufacturing contracted 6.3%, which was a deterioration over the 2.4% drop seen in the previous quarter. The construction sector also decelerated over the previous quarter and grew a weak 0.2%, which was down from the 0.8% increase observed in Q1. In Q2, the agriculture, forestry and fishing sector fell 17.4%, thus marking a deterioration over the 16.6% contraction tallied in Q1.
Author: Dirina Mançellari, Senior Economist