Marcus tries to quell worries of a recession
Yesterday, the governor of the Reserve Bank, Gill Marcus, said she didn't believe South Africa was heading for a recession, despite a whole host of poor economic indicators. The new finance minister was also quick to reassure today. Let's take a closer look…
Economic indicators would have to be a lot worse to indicate a recession
Ms Marcus said that there would “have to be a very dramatic decrease on the numbers that are already there for us to go into a recession
,” reports Fin24.
She said the Reserve Bank “doesn’t see that happening”.
But the bank is still worried about poor economic growth, says BDLive
. Between January and March, “economic growth contracted 0.6%
” mainly because of the lengthy strike in the platinum sector. This “curbed mining and manufacturing production”.
After yesterday's reassuring comments by Ms Marcus, the new finance minister intervened today, says the SABC
. Nhlanhla Nene says he’s “not in a hurry to declare that South Africa is in a recession”.
He did he was worried “about the economic situation as it may have serious implications,” adds the SABC
. But he added that “the country will weather the storm again”.
But the near future at least isn’t look bright.
Could a second quarter of economic contraction be in store?
Some economists believe there will be “another contraction for the second quarter given that the strike is continuing,” adds BDLive
. And if that is the case, that “would mean a recession”.
Not helping the negativity surrounding an economic contraction is other data out over the past week. This includes a ballooning trade deficit
and a decline in the sales of new vehicles
Time will tell how the economy performs and whether South Africa will fall into recession territory. A lot will depend on how long the platinum sector strike continues for.