“South Africa is not in a recession, despite the latest gross domestic product (GDP) figures released by Statistics SA”, says economist Roelof Botha. Sounds ridiculous, right? We all know about the recession and its nasty side-effects. We experience the unemployment pains, corruption scars and political bleeds daily.
In fact, SA is in a technical recession which is defined as two successive quarters of negative GDP growth. A recession can also be defined as “an economy performing below potential”. But according to Botha there is more than one way to define a recession. “The OECD (Organisation for Economic Cooperation and Development) says one should compare GDP on a year-on-year (y/y) basis rather than on a quarterly basis. If you compare the second quarter of 2018 to the second quarter of 2017 one can see SA is not in a recession. That is a fact,” said Botha.
Forget the recession definitions. The shocking economic stats can’t be ignored. Unemployment in Mzansi has increased from 0,5% to 27,2% in the second quarter of 2018 and the quality of life has diminished. Traffic robots are buzzing with beggars and the country’s finances have been mismanaged by some authorities with poor judgment and questionable morals.
4 Reasons for the recession
Okay, we know that money is tight for the country and its dwellers. The Dollar throws its punches and the Rand tumbles to the ground. But what (or who) else is to blame for the economic downfall?
South Africa has gone through five finance ministers in less than 10 years. Before President Jacob Zuma came to power, it took 25 years to go through the same number of treasurers. In December 2015, the country had three occupants in the post. Absurd!
Switching ministers is never a great idea. After the dismissal of Pravin Gordhan, SA’s credit rating jumped to junk status, which compromises international markets.
Yeah, this one is a serious pain in the butt. How can a country’s economy flourish when an authority faces charges of corruption, fraud and money laundering? Let’s not go into too much detail here. We’d just like to know where they stack our tax money…
The sensitive subject of land redistribution is still causing a bit of disorder with the rand, and it is currently stifling South Africa’s business landscape. Foreigners are no longer investing in land and property in SA, since they fear monetary loss.
The proposed expropriation without compensation will have a terrible effect on the South African economy. According to NEWS 24 South Africa might experience Zimbabwe-like economic conditions, see a massive flight of foreign capital due to the weak protection of private property, and see subsistence farming crop up where commercial farms with access to capital had once provided food security and export markets.
Agriculture is in ‘n sticky situation. “Right now, we are facing what people are saying is a technical recession and it’s largely due to the performance of agriculture. Agriculture did not perform as highly as we thought, and some people are saying it’s because of the late rains and late harvest and it’s bound to correct itself in the next quarter,” says Ramaphosa.
Is there hope for Mzansi?
“All is not lost”- says President Cyril Ramaphosa.
“I am saying we should not be fearful and think that we are in a recession, we are not, and this is going to be corrected. I have no doubt about it and secondly, and we should not forget that we have faced such a situation before, economies go through cyclical processes and economies grow and go down all the time”, added Ramaphosa.