Recession poses a threat to elections for the ANC – report

South Africa officially entered a technical recession on Tuesday signalling danger for the ANC’s election campaign ahead of next years elections.

According to a Bloomberg report, Ramaphosa’s new dawn did not soften Tuesday’s news that the economy was in a recession.

Ramaphosa will have a tough task of restoring investor confidence while reducing poverty, a result of nine years of bad governance during the last few years of former president Jacob Zuma’s term.

With the looming elections, confidence in the Ramaphosa which saw Zuma ousted has since faded.

The president took over the ANC when the ruling party’s support had slipped into a record low of 54.4% in the 2016 municipal elections which led to the ruling party losing control of Johannesburg to a coalition.

Daniel Silke, director of Political Futures consultancy in Cape Town, told the publication that Ramaphosa’s inability to grasp the nettle when it came to rebuilding confidence was a solid contributor.

Although Ramaphosa has managed to rope in $100 billion in investment, his plans have been undermined by the ANC’s decision to amend the constitution to allow for land to be expropriated without compensation to help transfer more ownership to black farmers.

“The gross domestic product numbers pose a particular challenge to President Ramaphosa,” said Roland Henwood, a political science lecturer at the University of Pretoria.

“He has to balance the pressure to grow the economy but at the same time he has to do things that go against the logic of growing the economy, in terms of pacifying a restless population.”

The rand has weakened almost 20% against the dollar this year, the fourth-worst performer among 24 emerging markets monitored by Bloomberg.

Stats SA announced that the country’s real gross domestic product had decreased by 0.7% in the second quarter of 2018.

Since GDP contracted by 2.2% in quarter 1, the country is now officially in a technical recession, which means two consecutive quarters of negative growth.

Even though the shrinking of the economy has slowed, agriculture, transport, and trade have weighed down the country’s ability to bounce back.