SOUTH AFRICA’S ECONOMY - Why President Zuma is wrong on the state of the economy

SOUTH AFRICA’S ECONOMY

Why President Zuma is wrong on the state of the economy


South Africa is in a structural decline rather than a cyclical decline

Stes de Necker

While Zuma has claimed that it’s not all “doom and gloom” when it comes to the state of the economy in South Africa, new Gross Domestic Product (GDP) data suggests something entirely different.

 According to Zuma, local economic growth is expected to increase to at least 3% over the next three years. Last week it was announced that South Africa’s Gross Domestic Product (GDP) contracted 1.3% in the second quarter of 2015 over the previous quarter.

According to Elna Moolman, an economist at Macquarie Group, South Africa’s economic growth is now expected to be only 1.5% this year, and nothing better next year.

The GDP decreased of 1.3% in the second quarter means there is now a very real danger that the economy will slip into a recession resulting in further job shedding in South Africa, destroying the prospects of employment for the 7.6 million people looking for work in South Africa . The recent wage disputes in the gold and coal industries, which will inevitably result in more strikes and more lost production, does not assist the already dire situation.

The economic slowdown means that the projected economic growth falls far short of the 5.4% economic growth envisaged in the Government’s National Development Plan, which, in turn, will impact negatively on revenue collection in South Africa. Thus far the South African Revenue Service had already fell R2.94 billion short of the revenue collection target for the first quarter of 2015. 

Instead of courting China, Zuma and the ANC Government should rather be tackling the fundamental roadblocks to economic growth, including policy uncertainty, the energy crisis, inflexible labour laws, failing State-Owned Enterprises, and red tape which is stifling small business. 

The ANC is looking at the wrong countries as partners to boost the South African economy.

South Africa is in a structural decline rather than a cyclical decline, which raises the question whether the ANC Government has the foundation and skills to make this country grow.

China still tolerates the ANC’s incompetence and corruption because it suits them to get a threshold on South Africa. 

No Western country would do that.