By Ntando Thukwana.
South Africa’s economy snapped six quarters of growth, contracting more than expected in the second quarter as the fallout from the Iran war weighed on manufacturing, trade and mining output.
Gross domestic product shrank 0.2% in the second quarter, compared with revised growth of 0.4% in the prior three months, Statistics South Africa said in a report released in the capital, Pretoria, on Tuesday. That exceeded a median estimate for a 0.1% contraction in a Bloomberg
Mining, trade and manufacturing — sectors that together account for almost a third of GDP — slumped 3%, 1.9% and 1.8%, respectively.
The situation in the Middle East impacted these numbers, especially for manufacturing, said Joe de Beer, deputy director-general at Stats SA. “We had a the third quarter of contraction. This is manufacturing in recession, and there are multiple factors that are weighing on that” including weak demand and higher fuel prices, he said.
Annual growth of 0.9% in the quarter was also weaker than the 1.2% median estimate of 10 economists in a separate Bloomberg survey.
The worse-than-expected outcome is a blow to the government of national unity, formed after the African National Congress lost its outright parliamentary majority in the 2024 elections and made accelerating economic growth a priority. It could also damp sentiment ahead of local government elections due on November 4.
Fighting in the Middle East erupted on February 28 when the US and Israel staged airstrikes on Iran. The Islamic Republic responded by firing missiles and drones at American allies across the region, with clashes persisting throughout most of the second quarter.
The conflict sent the prices of oil, fertiliser and other commodities surging and threatened global trade as traffic through the Strait of Hormuz, a key waterway, slowed to a near halt. A ceasefire that was signed on June 17 collapsed within days and there have been intermittent attacks since then.
Expenditure GDP also shrank for the first time in more than year, declining 0.2%, with gross fixed capital formation also decreasing 0.2%, its the second straight quarter of contraction.