South Africa's central bank sees the country exiting recession

Africa's most advanced economy unexpectedly contracted in the first quarter of this year, slipping into its first recession since 2009.

Published: 28th July 2017 03:52 PM  |   Last Updated: 28th July 2017 03:52 PM   |  A+A-

By AFP

JOHANNESBURG: South Africa's central bank chief said Friday the country was expected to have emerged from its first recession for eight years during the second quarter of this year.

Africa's most advanced economy unexpectedly contracted in the first quarter of this year, slipping into its first recession since 2009.

"We believe that the worst is behind us –- and that growth in the second quarter of this year will be positive," said central bank governor Lesetja Kganyago.

The bank forecasts the economy to grow by 0.5 percent this year, which it expects to rise to 1.5 percent in the next two years.

"This is clearly too low to make any meaningful inroads on unemployment," he said. South Africa's joblessness stands at a record high of 27.7 percent.

Last year South Africa's economy grew a paltry 0.3 percent, posting the "worst domestic growth performance" since the global financial crisis of 2008-2009, said the governor.

Last week the bank slashed its key interest rate for the first time in five years as the country battled the recession and international credit downgrades.

South Africa's economic woes have been exacerbated by the political uncertainty that followed President Jacob Zuma's controversial March reshuffle of ministers.

The shake-up, which included the axing of respected finance minister Pravin Gordhan and his deputy Mcebisi Jonas, sent tremors through the financial markets. 

It also prompted ratings agencies Fitch and Standard & Poor's to downgrade South Africa's credit rating to junk status

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