Cabinet focuses on jobs crisis, stagnation as pressure mounts
Statistics SA data shows manufacturing production contracted in the second quarter
Manufacturing data pointing to the dire state of the economy added to pressure for ministers to find solutions to the country’s jobs and growth crisis.
The start of a two-day cabinet lekgotla on Tuesday coincided with the release of Stats SA data showing that manufacturing production contracted in the second quarter.
Mining and retail numbers due next week may provide a clearer picture, probably killing off any prospect of SA meeting President Cyril Ramaphosa’s already ambitious target of 3% growth for 2018 — which is well above the predictions of the Treasury and the Reserve Bank.
"You still need to see a spectacular performance in the mining sector and reasonable growth in the retail and motor vehicle sectors, as well as the services sectors," said Nicky Weimar, a senior economist at Nedbank. She described the possibility of a recession, defined as two consecutive quarters of negative growth, as still being high. "One negative print could derail it all."
The news comes at a tricky time for Ramaphosa, who is trying to impose his authority on the country and the ANC as the initial euphoria that accompanied his election is dwindling amid a weak economy and a jobless rate that is nearing 30%.
The discussions at the lekgotla are set to home in on the economy and emerge with a stimulus package for growth and employment.
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