A bad winter for economy

SPRING LOOKS LESS PROMISING: A LESSON FROM THE EAST The reality of declining investment and growth, unemployment or public purse is not just bad news; it’s a reflection of a government unable to solve its problems to the point where it reaches crisis lev

On Tuesday, President Jacob Zuma stated the obvious: “The country faces challenges of sustained low growth and investment, rising unemployment and the deteriorating position of public finances.” Growth that was to be 1.3% is now expected to be below 0.5%.

An above 1% growth was an imaginary Aladdin, rubbed off from some magic lamp dreamed up but those who buried their heads so deep in denial they’re rendered blind to the political risk to the economy.

Someone must tell our president, this is more than just an economy “under duress” – this qualifies as a catastrophe.

Again, someone must remind our president, when your economy is in a hole, stop digging. The Mining Charter is an example. Someone must say: “Unless you’re going to magically pull this economy out of recession, you have no business letting the political and policy fires burn for so long without putting them out.”

Statistics South Africa (StatsSA) recently reported SA has a youth-dominated population that has grown by a million people in a year – to 56.5 million.

Unless the challenges Zuma stated are quickly addressed, I’m convinced the unemployed and poor won’t wait for crumbs to trickle down from the main table.

There’s no indication of good news lurking behind this winter, or hope that spring will bring about a new bloom for the economy.

More telling is how those meant to be steering this ship are publicly of opposing views in key policies.

Recent comments by the president, deputy president and finance minister on the Mining Charter is an example. The former supports it while the latter two have called for it to be revised.

Amid this backdrop of political inconsistency on policies and uninspiring leadership I can’t help but think of lessons SA’s leaders can learn from Japan’s 90s economic sickness.

The parallels can be drawn:

For Japan the time it took the financial system [to recover] dragged the economy down. In SA, [there’s been] chop and changing of policies in the past two years.

Some Japanese commentators claimed trickery and when the finance minister [declared] the crisis, they dismissed it as a lie. Some ANC leaders often mention ‘third force and counter revolutionary agents from the West’.

Herein lies a lesson for Zuma and his colleagues.

In Japan the economic failure and collapse took years to be visible and felt by the ordinary person.

SA, however, is already at a disadvantage because of its historic and deeply-entrenched challenges. It doesn’t have time on its side, since the majority of its people earn below the living wage.

The deteriorating credit worthiness conditions and rising costs of basic necessities is hallowing out the middle class to the point of being unable to spend money, let alone pay debts.

Someone please tell those at the Union Buildings that no luck, nor passage of time, will fix this economy. They have to put the policies that make economic sense and are implementable in place.