South Africa’s economy is not heading into recession, despite contracting in the first quarter, new Finance Minister Nhlanhla Nene said in a newspaper interview published on Sunday.
Data last week showed that Africa’s most developed economy shrank 0.6 percent in the first three months of the year from the previous quarter, as mining production slumped by nearly a quarter due to a protracted strike in the platinum sector. [ID:nL6N0OD2CR]
The quarterly contraction – the first since a 2009 recession – presents a challenge for Nene, who was appointed last week to steer an economy that has struggled to post convincing growth or generate new jobs in recent years. A recession is defined as two consecutive quarterly declines in gross domestic product.
“My view is we are at the bottom of the curve, but we are not headed into a recession,” Nene told City Press newspaper.
“Since 2009, our planning has always been for a difficult situation.”
He also said that policy over the next five years would focus on improving business and investor confidence.
That is line with the recently re-elected ruling African National Congress’s National Development Plan, which is broadly seen as a pro-business platform.
Mining and manufacturing account for about a fifth of South Africa’s economy, but have been plagued by strikes in the last few years, reflecting rigid labour laws that critics say are a deterrent to investment.
The current mining strike, over wages, is now in its fifth month and is the costliest and longest in South Africa’s history.
reuters
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