ECONOMIC STAGNATION
SA needs export and investment revival
Significant causes of SA’s economic weakness include the fall in real fixed investment and fewer exports, writes Gavin Keeton
The Reserve Bank’s December Quarterly Bulletin provides stark evidence of the weakness of SA’s economy. It shows how urgently visionary leadership is required to reverse the negative consequences of the current stagnation for all South Africans. The economy grew just 0.2% in the third quarter of 2016. Between January and September, economic activity was just 0.4% up on the same period in 2015. Growth for the whole of 2016 has, in effect, stalled at 0.5%. We cannot blame the drought. Agricultural production from January to September was down 7.4% in real terms (adjusting for inflation) compared with 2015. But agriculture is such a small sector, contributing less than 3% of our GDP, so this decline reduced overall real growth by only 0.2percentage point. Much more significant causes of weakness were a 3.9% fall in real fixed investment and a 0.6% contraction in exports.Private sector investment was down 5.9%, while state-owned enterprises reduced their investment 1.5% in real terms an...
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