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Nene: SA not headed for recession

Johannesburg - South Africa's economy is not heading into recession, despite contracting in the first quarter, new Finance Minister Nhlanhla Nene said in a newspaper interview published on Sunday.

Data last week showed that SA's economy shrank 0.6% in the first three months of the year from the previous quarter, as mining production slumped by nearly a quarter due to a protracted strike in the platinum sector.

The quarterly contraction - the first since the 2009 recession - presents a challenge for Nene, who was appointed last week to steer an economy that has struggled to post convincing growth or generate new jobs in recent years.

A recession is defined as two consecutive quarterly declines in gross domestic product.

"My view is we are at the bottom of the curve, but we are not headed into a recession," Nene told City Press.

"Since 2009, our planning has always been for a difficult situation."

He also said that policy over the next five years would focus on improving business and investor confidence.

That is line with the recently re-elected ruling African National Congress's National Development Plan, which is broadly seen as a pro-business platform.

Mining and manufacturing account for about a fifth of South Africa's economy, but have been plagued by strikes in the last few years, reflecting rigid labour laws that critics say are a deterrent to investment.

The current mining strike, over wages, is now in its fifth month and is the costliest and longest in South Africa's history.
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