Ouch! The recession that fuzzy wuzzy Manuel said wasn't going to happen is here. Unlike most developed countries, expect no stimulus packages any time soon 'cos we are broke
n. In Australia for instance, they've already doled out cash of A$600 per person (children included) and up to a further A$950 per taxpayer (total about R11K) - intended to stimulate the economy or help people with savings. But in SA what can you expect..? I'll give you a clue. It rhymes with "luck all".
Storm not over - Treasury predicts more job losses - "South Africa is about to navigate through its biggest jobs bloodbath in 17 years with the Treasury saying the effects of the global financial crisis will be worse than previously anticipated." - The Sowetan
BAD…BAD TIMES - When the then Finance Minister Trevor Manuel tabled the budget in February, he spoke of South Africa’s ability to “weather the storm”. - The Times
Rate cut won't help - Economist Dawie Roodt of the Efficient Group
South Africa’s Economy Is Facing a ‘Sharp’ Decline
Recession Is SA's New Reality Check
The latest economic data has come out - and officially ushered in a recession in South Africa.
Data from Statistics South Africa (Stats SA) showed that SA’s real gross domestic product (GDP) at market prices on a quarter-on-quarter (q/q) seasonally adjusted annualised (saa) basis dropped by -6.4% in the first quarter of 2009 from -1.8% in the fourth quarter 2008.
It is also the worst figure since the third quarter of 1984, when GDP was at -6.5%, and it is the first technical recession in South Africa since the fourth quarter of 1992.
Non-seasonally adjusted year-on-year GDP in the first quarter was placed at -1.3% from 1.0%.
Growth was expected to have decreased by 3.9% on a quarter-on-quarter saa basis according to a consensus survey undertaken by I-Net Bridge.
The main contributors to the decrease in economic activity for the first quarter of 2009 were:
* Manufacturing (-3.3 of a percentage point),
* Mining and quarrying (-1.7 of a percentage point), and the
* Finance, real estate and business services industry (-0.5 of a percentage point).
Positive contributions by other industries included:
* General government services (+0.5 of a percentage point),
* Construction (+0.4 of a percentage point), and
* Personal services (+0.2 of a percentage point).
The Director-General of the National Treasury, Lesetja Kganyago, said in reaction to news of a recession that it needs to be seen in the context of the world economy contraction of 1.3%, but that the economic storm is more ferocious than initially thought.
"As a country we took decisions earlier to cushion the economy, but the storm is more ferocious than initially thought," he said.
Added Kganyago: "We are less bad than we would otherwise have been had we not done anything".
He also noted that there were some tentative signs of improvement in the world economy.
He pointed out that capital flows were resuming to emerging markets via flows into bonds and equities.
He said that a combination of "good timing" and "good credit standing" had just enabled South Africa to raise $1.5 billion on offshore capital markets.
"Our slowdown is less severe than in most countries," said Kganyago.
"The good news is we are not alone," he said.
"The impact of the global slowdown is less severe than in other countries," he concluded.
* * *
SNAP REACTIONS FROM ECONOMISTS
FANIE JOUBERT, economist at Efficient Group:
"It’s almost double what the market expected. This confirms that South Africa is in a technical recession and growth is under pressure."
DENNIS DYKES, chief economist at Nedbank:
"The figure is pretty awful."
ANNABEL BISHOP, economist at Investec:
Q1.09’s GDP figures confirms the economy was in recession and we expect this will be the case for Q2.09 and Q3.09 as well.
"The magnitude of the slowdown has caught officials by surprise and is hence supportive of further monetary easing. We continue to expect a 100bp cut in interest rates this week and a further easing in June and August.
"Recent SARB leading indicator data point to potentially an even bigger contraction in Q2.09 than in Q1.09 (an even more severe pace of slowdown in the business cycle)."