There were great expectations at the beginning of the year after the nomination of C. Ramaphosa as President, yielding to a surge in consumer confidence. However, 2018 has begun with a recession. Q2 GDP decreased by -0.2% q/q, after a -0.7% contraction in Q1. Overall, this recession is not broad-based. The negative figures were mainly driven by commodity outputs, particularly agriculture (-8.3% q/q) and metals (still -1% y/y, despite a slight recovery this quarter). The other sectors of the economy rather show a no growth picture than a broad-based recession. However, missed expectations on the GDP growth rate drove the ZAR to unexpected lows (-16% YTD). In conjunction with higher oil prices it should send inflation above 6%, and thus now posing a risk of monetary tightening. Overall, GDP growth is expected at +0.6% in 2018 and +1.3% in 2019. Lower growth and a weaker ZAR also point to an upside risk on debt ratios. External debt is revised up by +1pp to 52% of GDP in 2018