JOHANNESBURG, June 6 (ANA) – National Treasury said on Tuesday that finance minister, Malusi Gigaba, would be meeting with business leaders in a bid to devise strategies to counter economic recession and achieve inclusive growth.
This comes as Statistics South Africa said on Tuesday that the South African economy has entered a recession for the first time since 2009, after growth contracted by 0.7 percent in the first quarter of the year.
The economy had slowed by 0.3 percent in the last quarter of 2016, meaning that it has had two consecutive negative growth quarters which technically signals a recession.
“The Minister of Finance Malusi Gigaba will be seeking a meeting with business leaders soon to discuss ways of working together to achieve inclusive economic growth,” Treasury said in a statement.
“The current state of the economy puts more pressure on us as government, business, labour and broader society to intensify our growth programme and improve confidence as a matter of urgency to arrest the decline and set the economy on a higher growth trajectory.”
The biggest negative driver for the first quarter was the trade, catering and accommodation industry, which shrank by 5.9 percent. Manufacturing declined by 3.7 percent and household consumption by 2.3 percent.
In total, seven out of ten manufacturing divisions showed negative growth, among them petroleum, chemical products, rubber and plastic.
On the other hand, mining and agriculture grew by 22.2 and 12.8 percent respectively.
Treasury said this worse-than-expected GDP outcome introduces significant downward bias to the GDP growth estimates communicated in the 2017 Budget Review, which projected 2017 GDP growth at 1.3 percent.
“The current growth rate, if sustained, will lead to a further decline in GDP per capita and revenue, risking the sustainability of our fiscal framework and more importantly undermining the delivery of social services,” Treasury said.
Despite the GDP contraction, Treasury said there were green shoots that South Africa can leverage on to boost its own economic growth outlook, including improving global growth, stabilising commodity prices, more favourable climate conditions, reliable electricity supply, and less volatile labour relations.
– African News Agency (ANA)
