Recession possibility worries the ruling ANC

Economists are predicting a slowdown for the second quarter of 2018

WITH Presidentcyril Ramaphosa pulling all the stops to revive the country’s economy, he will now have to contend with the possibility of the country slipping into recession.

Economists have predicted an economic retraction for the second quarter (April to June), which would throw the country into recession.

Poor performance in the manufacturing, agriculture and mining sectors have been cited as the trigger of such speculation.

Data from Statistics SA showed that manufacturing output was 0.7% year-on-year in June, the smallest gain in industrial output since February. Worried eyes are now on the performance of the mining sector’s results that will be released on Tuesday, and paint a picture of what lies ahead for the country.

Enoch Godongwana, the ANC’S chairperson of the economic transformation committee, said they were worried about the prospects of the country falling into recession.

Godongwana said part of the issues discussed during the governing party’s recent lekgotla was a stimulus package which he said would kick-start economic growth and avert any future threats of recession.

A recession happens when a country registers two negative growths for successive quarters. In the first quarter, the economy slumped by 2.2%, its worst performance in nine years.

In June 2017, Stats SA announced that South Africa was in a technical recession for the first time since 2009. The then president, Jacob Zuma, was heavily criticised.

Efficient Group economist Dawie Roodt said whatever the results of the quarter would be, “the fact is that the country has always been in recession because people are getting poorer and poorer.”

While Roodt said Ramaphosa inherited an ailing economy from his predecessor, he believed that Ramaphosa had failed to pull the economy from the rocks.

Ramaphosa took over president in February.

“There was much hope in Ramaphosa but nothing has really happened,” he claimed.

Roodt also said the ANC’S policy to expropriate land without compensation had dented the country’s image and was also a trigger for the sluggish economic growth.

The ANC adopted this policy during its December elective conference, which was as won by Ramaphosa.

Ramaphosa recently told South Africans via SABC TV that his party, the ANC, supported the amendment of Section 25 of the Constitution to allow for the expropriation of land without compensation.

Investec economist Lara Hodes said that policy certainty was a key factor in the Ramaphosa government’s drive to rebuild confidence.

“Crucial to lifting confidence, attracting investment and boosting economic growth is removing remaining uncertainties surrounding key issues, with land expropriation without compensation and the eradication of corruption and state capture key to this.”

In April Ramaphosa announced an investment summit aimed at raising R1.2trillion rand over five years.