Ramaphosa’s plans face growth spoiler
• Manufacturing, mining production drop • Implement structural reforms, urges Kganyago
A cloud hangs over President Cyril Ramaphosa’s ambitious plans to revive the economy.
Two of the biggest contributors to GDP growth contracted in the first quarter, threatening the president’s plan to more than double growth and make a dent on the nation’s unemployment and poverty levels.
Figures from Statistics SA released on Thursday show manufacturing fell 1.6% year on year, while mining production was down 3.4%, its biggest contraction in two years in March.
These were indications that the economy had hardly expanded, said NKC economist Elize Kruger.
While figures for the retail sector, expected next week, would paint a full picture of the knock that growth was likely to have taken, forecasts suggested to muted numbers.
Economists across the board and institutions had revised their growth forecasts upwards, but the mining and manufacturing numbers indicated a risk to growth prospects, Kruger said.
This may be a damper for Ramaphosa’s plan to grow the economy 3% in 2018. While the market has welcomed the recent change of leadership, reflected in the strengthening of the rand, it remains wary of the implementation of reforms, which could see higher growth expectations, a Goldman Sachs report says.
“The numbers are a little startling. Ramaphoria has been grossly overblown,” said Econometrix MD Azar Jammine. While the data point to the economy faltering substantially in the first quarter, he expected a mild improvement and said growth expectations of 1.5%-2% would not need to be revised down.
Speaking at the SwissCham Southern Africa general assembly in Zürich on Wednesday, Reserve Bank Governor Lesetja Kganyago said that while Ramaphosa’s election was an important turning point, it was “too early to declare that we are on a new growth trajectory”.
While the improvement in confidence had seen growth expectations revised upwards, he said it was not enough.
“Raising potential output significantly and in a sustained way requires not just a
The International Labour Organisation (ILO), the UN’s labour agency, has appointed President Cyril Ramaphosa to co-chair its Global Commission on the Future of Work.
Ramaphosa will join Swedish Prime Minister Stefan Löfven, who has chaired the committee since its inception.
The high-level commission was established in 2017 to undertake critical research into how countries could best respond to changes experienced in the world of work as a result of the fourth industrial revolution, as well as the changing nature of work.
GLOBAL EXPERTS
Development economist and visiting University of Cape Town professor Carlos Lopes is part of the commission’s 28-member committee, which includes experts from across the globe.
The Presidency said in a statement on Wednesday that Ramaphosa “expressed appreciation at the unanimous confidence shown by the ILO’s governing body and shared his high regard of the important work of this commission”.
It added that the work of the committee was aligned to Pretoria’s focus on the creation of decent and sustainable jobs, including efforts to empower young people with skills for transforming workplaces.
Ramaphosa will attend his first meeting at the commission when its members meet next Tuesday in Geneva.
NATIONAL DIALOGUES
SA was one of the more than 110 countries that participated in dialogues over the past 18 months that set the tone for the commission’s establishment.
The country’s contribution also formed part of the national dialogues report released by the ILO at the beginning of 2018.
The work of the commission has been divided into four “centenary conversations” — marking the 100th-year celebrations since the labour organisation was founded.
These conversations are work and society, decent jobs for all, the organisation of work and production, and the governance of work.
Business Unity SA (Busa) has welcomed Ramaphosa’s appointment, describing it as recognition of the country’s influence and contribution. “We believe this appointment will operate as a sign of confidence in the South African economy,” said Busa CEO Tanya Cohen.
INDEPENDENT REPORT
The commission is expected to produce an independent report on how to find opportunities that provide decent and sustainable work opportunities for all at the ILO’s International Labour Conference in 2019.