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South Africa in recession, Zuma under pressure

Tuesday, June 06, 2017 - 01:31

South Africa has entered recession for the first time in eight years, piling pressure on a government facing corruption allegations and credit downgrades. Sonia Legg reports.

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It's Africa's most developed economy but away from the beach South Africa is sinking. It's back in recession for the first time since 2009 - thanks to weak manufacturing and trade. The economy shrank by 0.7 percent in the first quarter of this year after a 0.3% fall at the end of last year. (SOUNDBITE) (English) ECONOMIC ANALYST, XHANTI PAYI, SAYING: "It's something that's already affecting people, so South Africans have already been experiencing this. I think we saw it in the jobs numbers that came out that unemployment had risen to over 27 percent - the highest in over a decade." S&P Global and Fitch recently downgraded South Africa's credit rating to junk. Political uncertainty was a big factor alongside the weak economic growth. (SOUNDBITE) (English) IG SENIOR ANALYST, CHRIS BEAUCHAMP, SAYING: "I think we see very little change in Africa. Zuma appears determined to cling onto power at all costs and this means investors will continue to worry that you don't have a stable prime minister, a stable president, someone committed to economic reforms." Zuma is also under pressure from inside his ANC party In March a controversial cabinet reshuffle led to accusations of influence peddling. He's denied any wrongdoing. But a consumer frenzy that's helped him and the economy in recent years is well and truly over. (SOUNDBITE) (English) SOUTH AFRICAN CITIZEN, MPHO MBELE, SAYING: "It will be hard for us to afford the things, for our needs actually, not even our wants." South Africa's Treasury is promising policies to boost growth. They'll need to act quickly - Moody's has now warned it's also considering a ratings downgrade.

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South Africa in recession, Zuma under pressure

Tuesday, June 06, 2017 - 01:31