Year-on-year growth in Africa's most industrialised economy was zero compared with forecasts of growth of 0.7pc .
"This was the largest economic contraction in almost a decade, ... It was largely driven by manufacturing, then mining," Statistician General Risenga Maluleke told a news conference.
At 0950 GMT, the rand was around 1.2 percent weaker against the dollar at 14.61.
The data will come as a shock to President Cyril Ramaphosa, returned to office after national elections in May with a pledge to revive growth and attract foreign investment.
Ramaphosa's reform drive faces formidable obstacles, including factional fighting within his governing African National Congress party, struggling state firms and weak consumer demand.
For 2019, as a whole the economy is expected to expand around 1pc , versus growth of 0.8pc last year, according to a Reuters poll.
That level of growth is insufficient to make a meaningful dent in poverty or reduce severe inequality, which persists in South Africa more than two decades after the end of white minority rule.