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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.

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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.

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“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.

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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.

African News

Proposal For UN To Study Climate Technologies Rejected

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Proposal For UN To Study Climate Technologies Rejected

A push to launch a high-level study of potentially risky technological fixes to curb climate change was abandoned at a UN Environmental conference in Nairobi late last week.  Countries, including the United states, had raised objections.

Switzerland’s Environmental Ambassador Franz Xavier Perrez, said that was a huge disappointment.  His country had proposed the UN assessment with the backing of eleven other governments.

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“Geo-engineering” technologies are gaining prominence, and they aim to pull carbon out of the atmosphere, or block some of the Sun’s warmth to cool the earth.

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Supporters say these technologies could help fend off some of the worst impact of runaway climate change, including worsening storms and heatwaves.  Opponents, on the other hand, argue the emerging technologies pose huge potential risks to people and nature and could undermine efforts to reduce greenhouse gas emissions.

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Tanzania: Stiegler’s Gorge Hydro-Electric Project To Produce Thousands Of Jobs

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Tanzania: Stiegler’s Gorge Hydro-Electric Project To Produce Thousands Of Jobs

Tanzanian government is optimistic that the implementation of Stiegler’s Gorge hydro-electric power station would produce thousands of jobs.  It is also expected to generate more than two thousand mega-watts.

Energy Minister, Dr. Medard Kalemani, told the parliamentary committee on energy and minerals that five thousand Tanzanians would be employed as temporary workers, and four hundred others would be employed under permanent contracts.

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Kalemani said the implementation of the project would not only uplift the livelihoods of Mloka villagers in Rufiji district in cost region, and of Kisaki villagers in Morogoro region, it would also enable the supply of electricity to 37 villages in Kibiti and Chalinze.  He said twelve villages will be connected to electricity under Tanzania Rural Energy Agency program.

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African News

African Court Doubles Its Judicial Productivity

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African Court Doubles Its Judicial Productivity

President of the African Court on Human and People’s Rights, Justice Sylvain Ore, has said the pan African organ, based in Arusha, has doubled its judicial productivity, and is optimistic it will even do better this year.

Commenting on the on-going reforms at the African Union, initiated under the guidance of the immediate past chairperson, President Paul Kagame of Rwanda, Justice Ore wanted the court to be a model for internal reforms and an efficiency icon for the rest of the institutions and citizens of the continent.

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The African court was established by the African Charter and began operations in two thousand six in Addis Ababa.  It moved to its permanent seat in Arusha a year later.  It has finalized 48 cases with a hundred thirty-five cases pending.

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So far, 30 countries have ratified the protocol establishing the court, but only nine countries—Benin, Burkina Faso, Ivory Coast, the Gambia, Ghana, Malawi, Tunisia, and hosts Tanzania—have made the declaration to allow individuals and NGOs to access the court directly.

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