Calls for action on SA recession

SA has tipped into recession, official data showed on Tuesday, prompting calls for urgent action to revive the economy.

DA leader Mmusi Maimane called for a debate in parliament, while finance minister Nhlanha Nene moved to ease concerns.

Stats SA announced on Tuesday that the economy was officially in recession‚ with GDP growth down 0.7% in the second quarter of 2018 following the massive 2.6% contraction in the first quarter.

The downturn was driven by contractions in agriculture, transport, trade and manufacturing industries.

Stats SA said agriculture was hit by a fall in field crops, drought in the Western Cape and severe hailstorms in Mpumalanga that damaged production.

Nene said he was due to present economic structural reforms and a stimulus package in October that he believes will pull the economy out of a technical recession.

Nene said while government was disappointed by the figures‚ he was confident the economic structural reforms and measures he was due table in parliament would help pull SA out of the woods.

Nene is due to present the Medium Term Budget Policy Statement MTBPS, which outlines the government’s economic blueprint and spending plans for the next three years.

The finance minister conceded that this year’s increase of VAT had taken money out of the pockets of citizens‚ with a decline in household consumption cited as one of the reasons for the contraction in GDP.

Speaking from Beijing, China‚ where he is attending the Forum on China-Africa Co-operation with President Cyril Ramaphosa‚ Nene said it was understandable for there to be panic in the country but said the government has a plan to be unveiled at the MTBPS next month.

“We understand the impatience of South Africans because we want things delivered as of yesterday‚” Nene said.

“The real reform package that comes out of the cabinet process is in the pipeline. There are formal processes under way‚ some of them culminating in the upcoming investment conference that the president is going to be holding in October‚ but also the MTBPS‚ because some of these are actually policy issues so I would imagine that by the time we go to the MTBPS‚ we should have concluded on them.”

The economy is set to be a critical issue in the 2019 national election – and the announcement of a recession less than a year before the polls does not bode well for the ANC government‚ already taking a hammering due to the revelations before commissions of inquiry on state capture and the SA Revenue Service (Sars).

Maimane will write to National Assembly Speaker Baleka Mbete requesting a debate on how to get the country’s economy up and running again.

Despite a change in leadership of the ANC, little else had changed, he said.

“There has been no fundamental change to the ANC’s approach to the economy.

“Corruption‚ policy incoherence‚ crumbling SOEs‚ lack of investment‚ and unstable governance continue to produce economic instability and rising unemployment‚” Maimane said.

“GDP per capita statistics show that actual household income has been in decline for the past five years.”

Maimane said SA was getting “poorer and poorer” under the ANC‚ with record-high levels of unemployment‚ a VAT increase for the first time in two decades and rising fuel costs having all engulfed South Africans this year.

Investec asset manager Michael Power said domestic and international events had combined to stall economic growth.

“We are getting no help from the outside with the strengthening dollar, the escalating trade war and issues that are now facing emerging markets,” he said.

Independent analyst Daniel Silke said on Twitter that the figures reflected an inability to create confidence-building measures to enhance work opportunities and uplift investor sentiment. –