South Africa’s economy shrank in the third quarter, defying expectations for further growth, worsening the outlook for the country, preliminary data from Statistics South Africa showed on Tuesday.
Gross domestic product decreased a seasonally adjusted and annualized 0.6 percent quarter-on-quarter, after a 3.2 percent growth in the second quarter. Economists were looking for a modest 0.1 percent expansion. In the first quarter, the economy shrunk 3.1 percent.
The mining, manufacturing and transport, storage and communication industries were the three largest negative contributors to GDP growth in the third quarter.
The three largest positive contributions to GDP growth came from trade, catering and accommodation; finance, real estate and business; and general government, the agency said.
Household consumption, state spending, investments and exports increased, while changes in inventories deducted 4.7 percentage points from growth. Net expots added 3.2 percentage points.
The weak GDP data suggest South Africa may loose its investment grade rating from Moody’s, the last of the top agencies to review the country’s rating. In November, the South African Reserve Bank cut the growth forecast for this year to 0.5 percent from 0.6 percent and the projection for next year was lowered to 1.4 percent from 1.5 percent. The outlook for 2021 was slashed to 1.7 percent from 1.8 percent.