Statistics South Africa (StatsSA) announced today that the country’s gross domestic product (GDP) increased by 1.6%. Even though positive growth was recorded in this quarter, it comes on the back of negative growth of 0.7% in the previous quarter, and long-term trends indicate that economic moment is far too low. Expectations are that our economy will grow at less than 1% next year, amongst the slowest in Africa.
The slight growth increase indicates that while the South African business environment has shown resilience and is recovering from damage done by the harsh lockdown restrictions imposed on it, the sector cannot achieve full growth potential under the ANC.
South Africa’s low growth trap is exacerbated by the Government’s self-manufactured energy- and economic crises that have resulted in soaring living costs. Government must utilize the freed up fiscal space to combat the cost-of-living crises more effectively.
The first step would be to release its stranglehold on the South African traveler and consumer by removing the fuel levy and increasing the zero-VAT rated food basket – the DA has proposed that the zero-VAT rated food basket also include items such as bone-in chicken, beef, tinned beans, wheat flour, margarine, peanut butter, baby food, tea, coffee, and soup powder.
Removing VAT on these items would disproportionately benefit the poorest 50% of South Africans who are already battling to put food on the table.
The ANC has effectively normalised sub-optimal growth and has shown itself far too interested in using taxpayer money to bail out failed SOEs, factional infighting, and upcoming party elections to worry about running the economy.
The DA will not allow this to continue. We will increase pressure on Government to implement workable economic policies to get our economy on the path to growth and to urgently address the cost-of-living crisis.