San Francisco Frontiers - South Africa economy shrinks ahead of local elections

The contraction comes less than two months before local government elections, putting the country's sluggish economy squarely in the political crosshairs.

Gross domestic product fell 0.2 percent from the previous quarter on a seasonally adjusted basis, StatsSA said.

Mining was the biggest drag, shrinking three percent as production of platinum-group metals, manganese, gold and iron ore fell.

Trade contracted 1.9 percent, ending six straight quarters of growth, while manufacturing posted a third consecutive decline, with seven of its 10 divisions reporting weaker output.

The weakness was compounded by rising imports and a second consecutive quarterly decline in investment, as exports grew only modestly and businesses and public corporations pulled back on capital spending.

In June, StatsSA warned that the fallout from the conflict in the Middle East, which erupted in late February and sent fuel prices soaring early in the year, could weigh on second-quarter economic activity.

The economy is expected to feature prominently in November's local government elections, with unemployment remaining stubbornly high at more than 33 percent, among the highest rates in the world.

Years of weak growth have added to frustration with the government.

Africa's richest economy shed 345,000 jobs in the second quarter, with most of the losses coming in the community and social services sector.

The economic malaise has deepened disillusionment with the ruling African National Congress, which lost its national majority in 2024 for the first time since the end of apartheid and was forced into an uneasy coalition government with rival parties.

Z.Sanchez--SFF