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Recession Looms In South Africa

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Recession Looms In South Africa

According to a poll of economists in Reuters, there is one in three chance of South Africa’s economy skidding into recession this year.

This is against the backdrop of the country’s economy struggling to gain traction in the second quarter after shrinking at the start of 2018.

Around 30 economists polled expect Africa’s second-largest economy to grow by 1.4 percent this year and by 1.9 percent next, slightly lower than the median view last month.

The South African Reserve Bank was even more pessimistic at its last monetary policy meeting, in July. It forecast that the economy would expand by just 1.2 percent in 2018, sharply down from a 1.7 percent projection in May.

For the second quarter, the consensus view sees just 0.6 percent growth on a quarterly basis. That would be a very feeble recovery from the 2.2 percent contraction recorded for January-March.

“The risk is that the services-driven sector, particularly financial services, fared poorly again in the second quarter, which could be the difference between whether South Africa avoids slipping into a recession or not,” said Jeffrey Schultz, economist at BNP Paribas.

The first quarter marked South Africa’s worst quarterly contraction in nine years, a reminder of the huge challenge faced by President Cyril Ramaphosa, who took over from Jacob Zuma in February, in delivering robust long-term growth.

“A real year-on-year growth rate for the second quarter of around or below 0.8 percent would result in a negative seasonally-adjusted and annualized growth value,” said Frank Blackmore of EFConsult, adding: “That would be the second quarter in a row of negative growth, and technically a recession.”

The poll showed the Reserve Bank holding interest rates at 6.50 percent until at least end-2019 and then only hiking them by 25 basis points in 2020.

However, this remains a huge challenge for South Africa’s rand currency, which has suffered from a broad emerging market sell-off this year.

A separate Reuters poll showed emerging market currencies are unlikely to rebound from this year’s downturn until 2019, in part on rising trade tensions and the prospect of higher interest rates in major economies.

Inflation in South Africa is expected to remain within the central bank’s 3-6 percent target band, averaging 4.7 percent this year and 5.2 percent next year and in 2020.

Joblessness and social inequality are among the biggest problems facing Africa’s most industrialized nation.

Just over a quarter of the country’s labor force is unemployed. South Africa’s Gini coefficient, a measure of income inequality by the World Bank, is 0.63, one of the most unequal societies in the world on a scale between 0-1.

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African News

EU Rejects Bid To Unfreeze Mubarak’s Assets

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EU Rejects Bid To Unfreeze Mubarak's Assets

Egypt’s former president, Hosni Mubarak’s bid for EU to unfreeze his assets in Europe was rejected on Wednesday.  The freeze was placed on his assets after his ouster in the 2011 revolution.

European union member countries imposed the sanctions in March 2011 based on lawsuits filed against Mubarak and his family in Egypt for alleged embezzlement of state funds.

After those countries – grouped in the European council – renewed the sanctions in 2017 and 2018, Mubarak asked the EU’s general court to annul them.

After Mubarak’s ouster, Islamist president Mohamed Morsi took power in 2012 before the military toppled him in 2013 following mass protests against Morsi’s rule.

Former military chief Abdel Fatah Al-Sisi became president later that year.

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Thousands Of Voting Machines And Ballot Boxes Destroyed In DRC Electoral Commission Fire

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Thousands Of Voting Machines And Ballot Boxes Destroyed In DRC Electoral Commission Fire

Thousand of voting machines and ballot boxes were destroyed when an electoral commission building in Congo’s capital, Kinshasa was razed in a fire. The machines and ballot boxes were to be used in the presidential elections ten days away.

The electoral commission says this would not hamper the election process, but that it is looking into the cause and extent of the fire.  It says machines from other parts of the country would be brought in to replace the ones consumed in the fire.

Presidential adviser Barnabe Kikaya Bin Karubi blames the fire on those he called criminals. He said most of the equipment meant for the polls in Kinshasa, the capital was destroyed in the fire.   More than 15 percent of the Democratic Republic of Congo’s population lives in the capital.

Meanwhile, the UK is now advising its citizens against “all but essential travel” to any part of DR Congo. It has also urged non-essential diplomatic staff to leave the country by next Monday.

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Ghana To Transport Essential Medical Supplies To Rural Areas By Drones

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Ghana To Transport Essential Medical Supplies To Rural Areas By Drones

Ghana Medical Association is reacting negatively to a government decision to transport blood and essential medical supplies to rural areas in the country by unmanned drones. The service has been contracted to an American company.

Deputy minister of information Pius Enam Hadzide said he was shocked by the GMA reaction over what he says would improve health services.

The Ghana Medical Association says the use of drones violates the country’s primary health care policy. It also said it would be counter-productive as it would cause more doctors and nurses to be unemployed in the administration of the drugs.

The drone goes into effect next year.  It was approved by parliament by a majority of a hundred and two to fifty-eight.

Rwanda already uses drones for the same purpose.

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