Economic data shows SA fell into recession in 2019
The economy has been hit hard by power cuts, which began in earnest in December and are expected to continue for the next 18 months. Struggling power utility Eskom, which has battled operational difficulties and requires regular financial support from the fiscus, has been identified as a key threat to SA’s economy. At the same time, consumer and business confidence has languished, weighing on household spending and private sector investment.
On the expenditure side of the economy, growth contracted 1.2% in the fourth quarter, deeper than a revised 0.4% decline in the third quarter. A key contributor to the decline was a sharp 10% decline in gross fixed capital formation, which is seen as an indicator of fixed investment in the economy. Annually, expenditure on GDP grew just 0.1% for the full 2019 year.
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