The pain of recessions, a dose of reality and a message of hope
19 June 2019
The global ratings agency Moody’s recently roundly declared in its Global Macro Outlook that South Africa’s chances of falling into a technical recession are high.
This comes on the back of the worrisome news that South Africa’s gross domestic product (GDP) had shrunk by 3,2% during the first quarter of 2019 – the biggest contraction in a decade. The economy grew by a mere 0,8% in 2018 after a technical recession struck in the first half of the year.
According to Moody’s, the country’s “persistent economic weakness” is due to tepid domestic private sector demand. This relates to household spending and investment, and the noxious effect of widespread power outages on manufacturing and mining.
“South Africa faces complex economic problems. The task of reviving the economy will be challenging and reforms will take time to take effect,” the report stated.