South Africa’s economy is not heading into recession, despite contracting in the first quarter, new Finance Minister Nhlanhla Nene said in a newspaper interview published on Sunday.
Data last week showed that Africa’s most developed economy shrank 0.6% in the first three months of the year from the previous quarter, as mining production slumped by nearly a quarter due to a protracted strike in the platinum sector.
The quarterly contraction – the first since a 2009 recession – presents a challenge for Nene, who was appointed last week to steer an economy that has struggled to post convincing growth or generate new jobs in recent years. A recession is defined as two consecutive quarterly declines in gross domestic product.
“My view is we are at the bottom of the curve, but we are not headed into a recession,” Nene told City Press newspaper.
“Since 2009, our planning has always been for a difficult situation.”
He also said that policy over the next five years would focus on improving business and investor confidence.
That is in line with the recently re-elected ruling African National Congress’s National Development Plan, which is broadly seen as a pro-business platform.
Mining and manufacturing account for about a fifth of South Africa’s economy, but have been plagued by strikes in the last few years, reflecting rigid labour laws that critics say are a deterrent to investment.
The current mining strike, over wages, is now in its fifth month and is the costliest and longest in South Africa’s history.