The third-quarter economic data released today by Statistics South Africa (StatsSA), showing a 1,5% contraction in GDP when compared to the previous quarter, confirms the lack of resilience within the economy to recover sustainably from the pandemic. It was already abundantly clear before the economic shock of the pandemic that incoherent economic policy was dampening our economic growth prospects. Attempts to position a failed state at the centre of our economy have led to this catastrophe. There is an urgent need of a clear policy pathway to a sustainable recovery.
Today’s announcement follows the release of the Quarterly Labour Force Survey (QLFS) last week which revealed that the unemployment rate had increased to 34.9%, the highest since the start of the QLFS in 2008.
The steady stream of negative economic data not only confirms that lack of resilience within the economy to absorb economic shocks but also highlights the lack of a clear policy plan to stop the bleeding and set the economy on a positive growth path.
While the DA welcomes the portal that was launched by National Treasury in September to register and provide relief to businesses affected by the unrest and looting in KwaZulu-Natal-Natal and Gauteng in July, the intervention does not go nearly far enough. The latest irrational international travel bans on South Africans will place additional strain on an already faltering economic.
Informal sector businesses, which were disproportionately affected by the riots, appear to have been excluded from this intervention due to their lack of registration as formal businesses. With more South Africans turning to this sector to make a living as a result of job insecurity, it is imperative that government support to compensate for the July riots be extended to this sector. Decisive policy steps need to be taken to create an environment in which all business, especially micro enterprises can flourish. By unlocking this potential, sustainable, job creating and poverty alleviating economic growth becomes possible.
In October, we warned that Minister Enoch Godongwana’s Medium Term Budget Policy Statement failed to show a clear path to economic recovery. He offered no detail then, or subsequently, on how he will address the energy crisis, make businesses easier to do and reform the labour market. Without a clear policy pathway over these fundamental roadblocks to any economic growth we can only expect more of the same and negative growth.
With the national budget only two months away, it is imperative that the Minister provides an ambitious plan to fix the energy crisis, hold the fiscal line, accelerate sustainable structural economic reform and increase infrastructure investment.