President Zuma is wrong on the economy: it is “doom and gloom”

25 August 2015

President Jacob Zuma claims that when it comes to the state of the economy it’s not all “doom and gloom”. However, the fact that real Gross Domestic Product (GDP) decreased by 1.3 percent in the second quarter of 2015 suggests he is wrong.

That real GDP decreased by 1.3 percent in the second quarter of 2015 means there is now a very real danger that the economy may slip into recession and that there will be further job shedding in South Africa.

The economic slowdown means that the projected economic growth rate may fall below the 2.0 percent projected by the National Treasury, which is far short of the 5.4 percent economic growth envisaged in the National Development Plan.

This will, in turn, impact negatively on revenue collection, which the South African Revenue Service reported this morning had fallen short by R2.94 billion, or 0,9 percent of the revenue collection target, in the first quarter of 2015. 

However, most importantly the economic slowdown and possible recession is likely to lead to further job shedding, destroying the prospects of employment for the 7.6 million people looking for work in South Africa.

In the end, there are policy options available: by tackling the fundamental roadblocks to economic growth, including policy uncertainty, the energy crisis, inflexible labour laws, failing State-Owned Enterprises, and red tape which is stifling small business, we can boost economic growth and create jobs in South Africa.

Statement issued by David Maynier MP, DA Shadow Minister of Finance, August 25 2015