icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm

South Africa suffers shocking drop in agriculture after government threat to confiscate land

South Africa suffers shocking drop in agriculture after government threat to confiscate land
Massive declines in the agricultural, transport and retail sectors have dragged the South African economy into recession after nearly a decade of growth. It is a huge blow to President Ramaphosa's controversial reforms.

GDP in the second quarter contracted by 0.7 percent compared to the first three months of the current year. South African national currency, the rand, extended declines against the US dollar to more than two percent as government bonds fell after the released data.

“We are in a recession,” Statistician-General Risenga Maluleke said, commenting on the reports that reflect two consecutive quarters of contraction.

According to Statistics South Africa, agricultural production declined by 29.2 percent, while the transport, communication and storage sector dropped 4.9 percent. At the same time, mining output grew by 4.9 percent and finance by 1.9 percent.

The news is expected to increase concerns over the weakening rand, along with plans for a widely-debated land reform and negative after-effects triggered by state corruption under former president Jacob Zuma.

South African national currency plummeted under the pressure of emerging market jitters in Turkey and Argentina. It is expected to get worse amid investors' deep concerns about a government push for land reform that may have far-reaching economic consequences.

A draft proposal to confiscate white-owned farms and redistribute land to address racial inequalities was withdrawn for further study. However, the ruling African National Congress (ANC) has reaffirmed its commitment to the plan.

“This economy remains in the doldrums, that we are in desperate need for policy certainty and structural reform to get us onto a growth path,” Elize Kruger, an economist at Paarl, South Africa-based NKC African Economics, told Bloomberg.

“This type of environment is difficult for job creation. We’ll get stuck in our low-growth term if we can’t get out of this.”

For more stories on economy & finance visit RT's business section

Dear readers and commenters,

We have implemented a new engine for our comment section. We hope the transition goes smoothly for all of you. Unfortunately, the comments made before the change have been lost due to a technical problem. We are working on restoring them, and hoping to see you fill up the comment section with new ones. You should still be able to log in to comment using your social-media profiles, but if you signed up under an RT profile before, you are invited to create a new profile with the new commenting system.

Sorry for the inconvenience, and looking forward to your future comments,

RT Team.

Podcasts