The SA Daily
04 September 2019
Government must reform
- SA has managed to sidestep a technical recession in 2Q by posting GDP growth of a surprising 3.1% in that quarter, q/q seasonally adjusted and annualised. However, the risks are stubbornly entrenched to the downside because, in SA, real economic reform remains persistently lacking, and the global trade war remains ongoing.
- Per the SARB business cycle dating, the SA economy remains in a downward phase of the business cycle, which started in December 2013; this is the longest downturn since 1946. Furthermore, both SA as well as global monthly economic indicators still indicate further weakening.
- Still, the 2Q GDP growth outcome provides some cyclical relief — but SA fundamentals remain weak and confidence remains depressed. Real GDP per capita has been declining, indicating a population now poorer in per-capita terms. Our estimate of potential GDP from realised GDP is around1.5%; it had peaked at 3.8% in 2004.
- The persistent decline in real GDP per capita, dwindling real potential GDP, rising unemployment and the deteriorating fiscal stance call for urgent economic reforms to create both sustainable economic growth and employment creation.
- In addition, the ongoing turbulence in provinces such as Gauteng and KwaZulu-Natal, which together account for just over 50% of SA GDP, too requires resolution urgently.
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