South Africa is not out of the recession woods just yet, economist Mike Schussler warned on Tuesday.<\/p>\n
South Africa just escaped being in a recession in 2015, with the third quarter growth of 0.7%, Statistics SA announced on Tuesday.<\/p>\n
However, the drought, low commodity prices and visa restrictions could shift the country into a recession by early next year, said Schussler, director of economists.co.za.<\/p>\n
\u201cWe got away without a recession this time around as the second quarter did have a decline (-1.3%) in the size of our economy and another (negative growth) quarter would have technically put us into a recession,\u201d he said.<\/p>\n
Schussler said the \u201csilly visa restrictions that keep tourists away (from SA)\u201d are also to blame, because \u201cwe should have had a double digit increase due to the weak rand\u201d.<\/p>\n
He warned that growth remains weak and will unlikely improve. \u201cMany people are facing uncertainty in their jobs at present\u00a0 and we’re seeing a slowdown in investment spending,\u201d he said.<\/p>\n
Low oil prices saved recession<\/strong><\/p>\n \u201cIf it was not for the much lower oil price, we would have been in a recession already,\u201d he said, adding that some food prices that are lower internationally have kept the consumer \u201calive\u201d. Mining (-9.8%), electricity (-8%) and agriculture (-12.6%)\u00a0 are in recession, while manufacturing (6.2%) just got out of recession.<\/p>\n \u201cOverall many parts of the economy are very weak,\u201d he said.With estimates of a 1.7% population growth rate (mid-year population estimates show 55 million people in SA) and the economy growing at 1% over the last year, the average person is -0.7% poorer at present, explained Schussler.<\/p>\n \u201cSo for the average person…\u00a0 it is a recession and feels like a recession because we are worse off than we were before,\u201d he said.<\/p>\n Primary sector in a recession<\/strong><\/p>\n The primary sector of the economy has already entered a technical recession (two consecutive quarters of negative growth), declining by 10% q\/q in the third quarter following a 9.5% q\/q contraction in the second quarter, said MMI chief economist Sanisha Packirisamy.<\/p>\n \u201cDrought conditions and further pressure on commodities are likely to further damage growth rates in the primary sector (agriculture and mining) of the economy in upcoming quarters,\u201d she said.<\/p>\n “However, we expect this to be offset by mildly positive growth in the more defensive (less cyclical) tertiary\/services sectors leading to an overall pedestrian outlook for economic growth over 2016.”<\/p>\n South Africa narrowly avoids recession<\/a><\/strong><\/p>\n What South Africa\u2019s economy will look like in 2030<\/a><\/strong><\/p>\n South Africa\u2019s economy could sink to number three in Africa<\/a><\/strong><\/p>\nFin24<\/a><\/h3>\n
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