Tables turn on South Africa’s economy

South Africa’s economy snapped a six-quarter run of growth in the three months to June as the fallout from the war in Iran intensified and manufacturing and mining output contracted. 

Gross domestic product shrank 0.2% in the three months through June, compared with revised growth of 0.4% in the prior quarter, Statistics South Africa said in a report released in the capital, Pretoria, on Tuesday.

That exceeded a median estimate of a 0.1% contraction in a Bloomberg survey of 14 economists.

Fighting erupted in the Middle East on 28 February when the US and Israel staged airstrikes on Iran.

The Islamic Republic responded by firing missiles and drones at American allies across the region, with clashes persisting throughout most of the second quarter.

The conflict sent oil, fertiliser, and other commodity prices surging and threatened global trade as traffic through the Strait of Hormuz, a key waterway, slowed to a near halt.

A ceasefire that was signed on June 17 collapsed within days and there have been intermittent attacks since then. 

The inflationary impact of the war on South Africa’s economy has exacerbated faltering demand and weak business confidence, with a gauge measuring sentiment falling to a two-year low in the third quarter.