Oh The Pain of a Dismal 0.6% Growth!

Dear Editor

Today, StatsSA confirmed a rapidly deteriorating economic landscape. This is reflected in the dismal 0.6% growth in our gross domestic product (GDP) over the second quarter of 2023. A direct result of failed ANC policy.

In February 2023, the National Treasury estimated a growth rate of 0.9%, a target that, even though low and uninspiring, was evidently overly optimistic. In fact, our economy will not grow at the projected 1.4% over the medium term, given an ongoing government-induced energy crisis. This means that revenue was overstated in the budget and less money will be available for crucial expenditure on service delivery and social support.

The flailing GPD prospects has forced Treasury to introduce austerity measures. Already citizens are provided with decrepit state services in water, electricity, education, health, transport, and safety, among other areas.

Over the last 15 years, South Africa’s economy has underperformed, with an average annual GDP growth rate of 1.2% since 2008. Additionally, GDP per capita has declined by around R3,000 during this period. This sluggish growth has manifested in swelling public debt, diminished fiscal space, vanishing employment opportunities, and growing public disillusionment.

Our greylisting in February; record-breaking electricity blackouts, pro-Russian foreign policy and lack of fiscal response to the food and fuel inflation that is fuelling the cost-of-living crisis, further prevents economic recovery.

Moreover, the ANC’s approach to solving the electricity crisis has proven grossly inadequate as load-shedding and widespread corruption in the energy sector continues to supress economic activity, local business confidence and investment.

Still, instead of adopting ruthless growth focused reforms, the government is doubling down on destructive policies like expropriation without compensation and enhanced BBBEE. These policy missteps impact vulnerable South African households who are reeling under a government-induced cost-of-living crisis directly.

The message from today’s numbers should be that South Africa’s private sector has remained resilient despite the Government’s unwillingness to implement the requisite growth-friendly reforms, a testament to what could be achieved with competent governance.

Later this year, in October, the DA will present our Alternative Medium-Term Budget Policy Statement (MTBPS), and present a blueprint for virtuous growth, that remains possible. To establish resilience and stimulate economic growth our MTBPS will propose innovative solutions to attract foreign capital, encourage domestic savings, revitalise state-owned entities, fix our crumbling infrastructure, enhance labour market participation, secure our social net, and facilitate the expansion of both the small and large business sectors.

Regards

Dr Dion George MP
DA Shadow Minister of Finance