Growth depends on rise in manufacturing

SA’s potential for growth hinges on the government revitalising the manufacturing sector, according to a report from the Institute for Security Studies.

SA’s potential for growth hinges on the government revitalising the manufacturing sector, according to a report from the Institute for Security Studies.

The sector has largely been volatile and after low production levels in the first three months of the year it is expected to make a significant dent in economic growth in the first quarter.

Growth in SA has remained paltry in recent years, hovering around 1%, and is not expected to breach the 2% mark in the medium term.

“Without an increase in manufacturing, you can’t grow the rest of the economy,” the institute’s Jakkie Cilliers said at the launch of the report on Tuesday.

In a developing economy with persistently low growth, this depends on the government’s support to foster economic growth and formulate and implement policy, he said.

President Cyril Ramaphosa’s “focus is exactly right. We need to place employment at the heart of everything.”

Ramaphosa has targeted industrialisation, manufacturing and infrastructure investments as drivers of economic growth.

“We are going to promote greater investment in key manufacturing sectors through the strategic use of incentives and other measures,” he said earlier in 2018.

The manufacturing sector has shrunk from 24% of GDP in the early 1980s to 13% in 2017. Manufacturing has struggled to pick up in recent years, with the overall level of production remaining far below the level of activity before the global financial market crisis in 2008.

“South African manufacturing has massively underperformed global manufacturing in the past 10 years,” said Stanlib economist Kevin Lings.

Manufacturing Circle chairman Andre de Ruyter expects the sector to create more than a million jobs if it can expand to 30% of GDP.