EFF STATEMENT ON SOUTH AFRICA'S REAL GDP DECLINE
25 August 2015
The Economic Freedom Fighters notes the recently released GDP figures by Statistics SA which indicates that economic growth declined by 1.3% in the second quarter of 2015. These figures support the EFF in saying that Jacob Zuma and the rest of the ANC government are in denial and were misleading the nation when he pronounced an improvement and possible economic growth, while indicators clearly pointed to a decline and an economy in distress. It is only a matter of time before the economy dips into a recession, as there are no prospects for growth in the near future and the ANC government has ran out of ideas on how to respond.
The crisis in the mining and steel industry continue to exploit fundamental flaws of an economy based on extraction and export of mineral resources. The mining sector has already lost thousands of jobs. It is estimated that in the next three years, the mining sector will shed 200 000 more jobs.
The ANC government continues to underestimate that the impact of the crisis facing the mining industry will have a devastating trickle-down effect on downstream businesses and mining communities. After government has begged the steel industry and failed, 50 000 workers will be left jobless and no income to feed their families. Global commodity prices will continue to deteriorate as demand from China continues to weaken.
The trivial first quarter GDP increase, which was attributable mainly to agriculture which expanded by R8 billion to R18 billion, was used as an indicator for improved economic condition. Zuma after being humiliated in Parliament as he failed to respond to the matter of illicit financial flows raised by the EFF, used a media briefing to mislead the nation and claim that the economy is showing signs of improvement.
In actual fact, a cause of confusion to Zuma and many in his cabinet as they were desperate to use anything to show improvement, is the maize harvest in the first quarter of the year, which boosted the agricultural sector by 3.3% growth. It is likely that, South Africa will be in a technical recession come the third quarter of the year. As the crisis in the mining and steel industry deepen further, and many will look to cut jobs to save whatever profit margins they can. It is also highly unlikely that the ANC government has the capabilities to respond with a coherent economic policy solution to deal the economic turbulences South Africa is in today.
Like many emerging economies that are highly depended on inflow of foreign capital, South Africa is highly susceptible to capital flights caused by paranoid foreign investors who seek safe havens for their profits. The South African economy is unnecessarily exposed to the vagaries of speculative foreign capital that has no loyalty to domestic developmental imperatives.
The EFF calls on government to put immediate measures in place to encourage domestic investment and ensure that companies that have previously been reported to be sitting on billions of cash reserves are investing locally. The EFF further urges government to take decisive and radical steps to ensure that there is massive industrial expansion and beneficiation of the mineral resources we export to China and other economies that no longer need them.
If the ANC government lacks cranial capacity to ensure radical economic transformation, the EFF is more than ready to take over and save the economy, create more jobs and deliver economic emancipation to our people.
Statement issued by the Economic Freedom Fighters, August 25 2015
