SA has officially entered a technical recession.

Gross domestic product (GDP) contracted by 0.7% quarter on quarter in the first quarter of 2017 — a shock as the consensus among economists was a rebound to 0.9% growth

The rand weakened over 1% against major trading currencies, falling to R12.84 against the dollar, R14.45 against the euro and R16.59 against the pound at 11.41am.

A technical recession is based on two consecutive quarters of negative growth. GDP in the fourth quarter of 2016 contracted by 0.3%.

The largest negative contributors to growth were the trade, catering and accommodation industry which slumped by 5.9% and detracted 0.8 of a percentage point from GDP growth (down by R16bn to R148bn) and the manufacturing sector contracted by 3.7%, down 0.5 of percentage point from GDP growth (down by R4bn to R129bn).

Mining was down by R14bn to R129bn while government expenditure was down by R2bn to R170bn.

GDP is up 1% compared to the same period last year.

Joe de Beer, Statistics SA deputy director-general of economic statistics, said on Tuesday: "We have officially entered a recession. The last time we entered a recession was 2008-9 when we had three consecutive quarters of negative growth."

He added: "There's a clear link between the fall in household consumption expenditure and the decline in trade."

Household consumption expenditure was down 2.3% quarter on quarter.

Stanlib chief economist Kevin Lings said it was especially concerning that since the global financial market crisis in 2009, the rate of economic growth in South African had not managed to gain momentum and had not been robust enough to lead to widespread job creation in the private sector.

"This is despite government debt almost doubling since 2009. There has to now be a real risk that South African tax revenue collection under-performs even more, putting the fiscal authorities under significant pressure," he said.

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