Recession worries ANC as general elections loom
Weakening rand a main concern
The ANC has expressed apprehension about going into the 2019 general elections while the country is still in a recession.
Yesterday, head of the party’s national executive committee (NEC) subcommittee on economic transformation, Enoch Godongwana, responded to a variety of issues a day after SA was officially announced to have plunged into a technical recession.
“There is demonstrable evidence across the world that there is a correlation between economic growth and electoral support. It is not a South African phenomenon. Obviously, we would be worried a bit if we are going to go into an election with an economy in a recession. That is why we are calling for measures that government must take into account,” he said.
Statistics SA released GDP figures showing that the economy declined by 0.7% in the second quarter of 2018, following a 2.6% decline in the first. The successive contraction meant that the economy is already in a technical recession, which has serious implications for employment, economic growth and investor confidence.
Godongwana said government should improve economic growth by developing and supporting industries that create more jobs and use tax credits to reward companies that invest in sustainable job creation. Another intervention that could help rescue the economy is the use of government’s multibillion-rand procurement muscle to empower local industries, thus reducing reliance on exports.
He conceded that the increase in the petrol price has had a severe impact on the economy.
“Part of this dilemma is that we are caught in the crossfire because our peers in the emerging markets are in trouble, like Turkey and Argentina. As a result, there is flight from the emerging markets and it is affecting the rand. That is a worrying development,” said Godongwana.
He said the ANC’s plans to amend the constitution in order to expropriate land without compensation should not be confused with what other political parties are preaching to the public.
He added that SA will have to present a credible growth story to the ratings agencies in order to prevent a downgrade in such a tough economic environment.
Economists have warned that government has to make immediate interventions to arrest the economic decline and prevent three successive quarters of negative growth.