South Africa’s economy may have contracted in the first quarter of the year, according to a report by NKC African Economics.
According to NKC African Economics, a provider of economic research, 2019 may be shaping up to follow suit.
“South Africa started the year on a disappointing note, with the return of sporadic load shedding, higher fuel prices, a higher tax burden, the strike in the gold mining sector and a moderating global economy all weighing on much-needed improvements in household and corporate confidence levels,” the group said on Monday morning.
“Low confidence levels are depressing expenditure and investment in the economy. Following on earlier downward revisions, indications from sectoral performances in the first two months of 2019 suggest that the economy contracted on a quarterly basis in Q1”.
The report comes as a number of international institutions have lowered SA’s projected GDP expansion for 2019. In January the World Bank lowered SA’s projected growth rate to 1.3% from 1.8%. In April the International Monetary Fund cut its estimated SA GDP expansion from 1.4% to 1.2%.
NKC now expects the economy to grow by just 0.8% in 2019.
“The dismal economic outlook for South Africa does not bode well for addressing the high unemployment rate and social economic challenges that a large section of the population faces.”
A lower-than-expected growth outcome may also again lower projected tax revenue. The SA Revenue Service is already facing a deficit of R14.6bn.
StatsSA will release first quarter’s GDP figures on June 4. A technical recession is two consecutive quarters of negative growth.