South Africa’s economy contracted back to pre-pandemic size in the second quarter, weakened by floods that disrupted operations at a key export hub and the country’s worst-ever power cuts, data from the statistics agency showed.

The contraction will provide renewed concerns for President Cyril Ramaphosa, who has been under pressure to lift the growth rate.

GDP contracted 0.7% in the second quarter in quarter on quarter, seasonally adjusted and non-annualised terms, data showed on Tuesday.

GDP grew 0.2% year on year unadjusted in the second quarter, Statistics South Africa said.

Economists had predicted 0.8% quarter-on-quarter contraction and 0.6% year-on-year growth.

The size of the economy was cut to R1.142-trillion, back to pre-pandemic levels in the fourth quarter of 2019 at R1.148-trillion.

Ramaphosa promised sweeping reforms after he took office in 2018, but Covid and persistent electricity cuts have constrained activity. The situation was further worsened by the floods.

The floods caused extensive damage to roads leading to Durban port, one of the busiest shipping terminals in Africa. Faulty power stations and labour protests at state utility Eskom led to severe power cuts.

Contraction

“In the form of power outages and load shedding as well as floods, we can see that these factors do make a contribution,” said Risenga Maluleke, statistician-general of Stats SA, explaining the decline in growth.

High input costs, such as fuel and fertilisers, worsened the drop in quarterly GDP numbers, he added.

The most heavily impacted industry was agriculture which shrunk by 7.7% in the quarter, followed by manufacturing, which contracted by 5.9%, the data showed.

In total seven industries contracted in the second quarter including, including trade, catering and accommodation which contracted 1.5% and mining and quarrying contracted 3.5%. Construction was down 2.4%, data showed. — (c) Reuters