South Africa witnessed a decline in manufacturing output and mining production as weak demand across the globe pushed the ailing economy closer to recessionary pressures. Figures from the Statistics South Africa showed that March manufacturing production shrank 2 pct while mining output plunged to record low of 18 pct.
"The economy is very weak, and with these set of figures, we're looking at the possibility of a contraction in the first quarter," said Dennis Dykes, Chief Economist at Nedbank.
Factory production was down 0.3 pct m/m, while it was up 0.1 pct in the three months ended Mar, 2016 compared to the previous quarter. A Reuters poll of economists had expected headline manufacturing to shrink by 1.1 pct.
South Africa’s economy grew 1.3 pct last year and 0.6 pct in the last quarter ending Mar 31, 2016. The National Treasury, in its February Budget had lowered its growth forecast for this year to 0.9 pct from 1.7 pct. However, the International Monetary Fund has cut its 2016 growth outlook to 0.6 pct. Further, all three major ratings agencies have cited weak growth and policy upheavals as major risks to South Africa's investment-grade rating.
On Mar 6, 2016, Moody's maintained the country's Baa2 rating but with a negative outlook. Fitch and Standard & Poor's rated the country's debt just one notch above sub-investment grade and are due to revisit the ratings in June, reports confirmed.
