JOHANNESBURG (AP) — South Africa’s economy dropped by the most in a decade in the first quarter of this year, the government announced on Tuesday, hurting newly elected President Cyril Ramaphosa’s efforts at growth and reforms.
The government said the economy declined by 3.2% in the first quarter of 2019 from the fourth quarter of 2018, when growth was 1.4%. South Africa fell into recession briefly late last year, and some observers worry that sub-Saharan Africa’s most developed economy is slipping into it again.
Widespread power outages, the worst in years, were in part to blame for the first-quarter drop. South Africa’s important mining sector fell by 10.8% and manufacturing sector by 8.8%, with agriculture down 13.2%.
Ramaphosa first took office early last year after predecessor Jacob Zuma was forced to resign amid corruption allegations. Public outrage over graft scandals during Zuma’s nearly decade-long stay in office hurt the ruling African National Congress in last month’s election, which won its weakest majority in a quarter-century in power.
The new administration now faces the challenges of reviving the economy and restoring public and investor confidence.
Eskom, which provides most of South Africa’s electricity, has debt of more than $30 billion and is at the center of Ramaphosa’s efforts to rid state-owned enterprises of corruption and mismanagement. “Eskom is in crisis and the risks it poses to South Africa are great,” the president said in his state of the nation address in February.
Ramaphosa faces some pushback, however, amid worries about layoffs in a country where the unemployment rate is 27%. But the International Monetary Fund in a statement on Monday said the operations of public enterprises and Eskom in particular “represent a major downside risk to growth” and that future performance depends heavily on whether — and how quickly — the country’s reforms take hold.
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