South Africa plunged into its second recession in eight years in the first three months of the year, even before a political crisis in the ruling African National Congress triggered rating cuts to junk status.

On an annualised basis Africa’s most industrialised economy contracted 0.7 per cent in the first quarter after a 0.3 per cent drop at the end of 2016, Statistics South Africa said on Tuesday. The announcement confounded most economists’ expectations for growth of about 1 per cent.

All sectors of the economy apart from agriculture and mining contracted in the quarter, while household spending fell 2.3 per cent, the statistics agency said. Farming expanded at its fastest rate in a decade as it recovered from a severe drought last year. But consumer-focused sectors, such as manufacturing and finance, posted particularly sharp declines.

In a statement released on Tuesday, the Treasury said: “The Minister of Finance Malusi Gigaba will be seeking a meeting with business leaders soon to discuss ways of working together to achieve inclusive economic growth. The South African Rand weakened by 1.4 per cent to less than R12.90 against the Dollar after the GDP data release.

  • cnbc.com