South Africa’s economy contracted in the third quarter of this year due to a drop in agricultural production spurred by a devastating drought.
According to Statistics South Africa, gross domestic product (GDP) fell 0.3% year on year despite an initial growth projection of 0.5%.
The drop in economic growth projection comes on the back of a major drought which has affected food production Agriculture, forestry and fishing contracted by 28.8%. Field crops like Maize and Soy bean were hit by the drought, leading to a drop in the country’s economic growth projection.
“Maize and soy account for about 70% of field crops and we know they have had a difficult quarter due to drought,” statistician Joe de Beer told a news conference.
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Also, Capital Economics analyst David Omojomolo said in a research note that the unexpected drop could encourage the South African Reserve Bank to continue with its monetary easing cycle.
Razia Khan, chief economist for Africa and the Middle East at Standard Chartered, said the outlook for Africa’s most industrialised economy remained positive despite the third-quarter contraction.
South Africa’s third-quarter GDP grew 0.3% on a year-on-year basis, also worse than the 1.2% growth predicted by economists.
