Tuesday 4 September 2018 1:33 pm

South Africa falls into recession as agriculture and transport industries slump

Reporter at City A.M. covering banking, markets and insurance

Reporter at City A.M. covering banking, markets and insurance

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South Africa has fallen into recession for the first time since 2009 after second quarter statistics showed the economy contracted by 0.7 per cent.

The country's official statistics agency – Statistics South Africa – said the decline in gross domestic product (GDP) was contributed to by slumps in the agricultural and transport sectors.

Emerging market currencies have been hit by the heaviest fall in almost a month today amid a strengthening dollar.

But the rand was the worst of the bunch followings its second quarter statistics – falling 2.8 per cent against the dollar.

Forecasts had been optimistic as President Cyril Ramaphosa looked to revive the economy after replacing Jacob Zuma earlier this year, with Thomson Reuters predicting economy growth of 0.6 per cent this quarter.

Statistics South Africa said agriculture production fell by 29.2 per cent in the second quarter, following a 33.6 per cent slump in the first quarter.

It said this was largely driven by a decline in crop production and continued drought conditions in Western Cape.

The transport industry contracted by 4.9 per cent due to decreased activity in both land and air transport and industrial action.