The SA economy is in far worse shape than most people realised. News that growth contracted again in the second quarter, tipping the economy into recession, has shocked the markets: most participants were expecting a mild rebound. Coming on top of the collapse in the manufacturing purchasing managers index (PMI) from 51 to 43 index points, and other poor third-quarter data, SA’s economic outlook has darkened considerably. The rand has weakened to well over R15/$ in response. This is the first time since 2009 that SA has entered a recession — something that may shred confidence in President Cyril Ramaphosa’s ability to lead an economic revival. "SA will have to try harder to achieve positive growth [now]," says Standard Chartered chief economist Razia Khan. "Positive political change on its own is not going to be sufficient." Disappointing GDP growth will have a knock-on effect on the national budget through weaker tax revenue collection. Further fiscal slippage in 2018/2019 now appe...

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