Nhlanhla Nene. Picture: TREVOR SAMSON
Nhlanhla Nene. Picture: TREVOR SAMSON

Finance minister Nhlanha Nene says he is due to present economic structural reforms and a stimulus package that he believes will pull the economy out of a technical recession.

This is after it emerged that the economy had slipped into its first technical recession in nine years, following Statistics SA’s announcement on Tuesday that the country’s GDP shrank 0.7% in the second quarter of 2018. The GDP drop followed a revised fall of 2.6% in the first quarter of 2018.

Nene said that while the government was disappointed by the latest economic figures‚ he was confident the economic structural reforms and measures to stimulate the economy — due to be tabled in parliament in October — would help pull SA out of the woods. The medium-term budget policy statement will outline the government’s economic blueprint and spending plans for the next three years.

Nene also conceded that this year’s VAT increase had taken money out of the pockets of citizens‚ with a decline in household consumption cited as one of the reasons for the contraction in GDP.

Speaking from Beijing, China‚ where he is attending the Forum on China-Africa Co-operation with President Cyril Ramaphosa‚ Nene said it was understandable for there to be a panic in the country, but insisted that the government had a plan.

"The real reform package that comes out of the cabinet process is in the pipeline. There are formal processes under way‚ some of them culminating in the upcoming investment conference that the president is going to be holding in October‚ but also the [budget policy statement]‚ because some of these are actually policy issues so I would imagine that by the time we go to the [budget policy statement]‚ we should have concluded them."