SA’s economic outlook is ‘dire’
THE ANC has admitted that the country is starkly facing the prospect of a recession as the interventions by the government to arrest negative economic growth have failed.
Senior ANC leaders have acknowledged that the government might have to review some of its policies to stimulate growth.
The party’s head of economic transformation, Enoch Godongwana, told Business Report that the economic outlook of the country was dire, and that rating agencies might soon cast a negative view on the country’s ability to borrow in the market.
“We cannot ignore the realities that we are currently faced with,” Godongwana said on the sidelines of the party’s national general council (NGC). “Everything points to the negative: the commodity prices, the currency fluctuations and stagnant growth, this means we have to come out with something more (to) attract foreign direct investment.”
Godongwana blamed the bleak economic prospects on falling commodity prices and the meltdown in the Chinese economy. He said the crippling drought in the country was not helping the situation as the agricultural industry had also shown a contraction in the last quarterly report by Statistics SA.
“It is true that we are dealing with international factors that we have no control over, but there are things that we can do to make ourselves attractive,” he said. “One of them would be to think whether it is sustainable to spend so much on the civil service and grow it to deal with unemployment.”
Looming recession
In his organisational report to the council, ANC secretarygeneral Gwede Mantashe also pointed out that prevailing local economic conditions had failed to address unemployment and growth levels.
The report said government interventions, including strategic policy frameworks, the national growth path, the Industrial Policy Action Plan and the national infrastructure plan, have not stopped the decline that could soon blossom into a recession.
It said although the party had made efforts to aid the situation, the problem appeared to be much bigger.
“Any radical economic transformation will remain a dream until the ANC effects fundamental change in the structure of the economy,” the report states.
Mantashe said the council needed to determine “whether these policy frameworks are enabling enough for the country to prosper and the economy to grow”.
New normal
Mantashe said the country was at a point where the economy’s low growth rate was the “new normal”, struggling to deal with the problematic high unemployment rate.
“We must emphasise that the ANC must find a way of encouraging the private sector to be part of the solution.”
Earlier, President Jacob Zuma said despite undertakings to take decisive action to overcome poverty, inequality and unemployment, which are at the heart, economic growth had failed to address the problems.
Zuma said for the country to achieve inclusive growth and create jobs, the economy had to grow at faster rates.
“The NGC must reflect frankly on why our economy is not expanding as fast as we desire,” Zuma said.
“In addition to the slow global growth, we also have several domestic obstacles… These include energy, falling commodity prices and the sometimes unstable labour relations environment.”