Ebrahim Patel. Picture: TREVOR SAMSON
Ebrahim Patel. Picture: TREVOR SAMSON

The ANC and the DA on Wednesday sparred in Parliament over the recession and who is to blame for it, with the official opposition pointing fingers at the governing party.

SA slid into a recession after GDP contracted 0.7% in the second quarter. This was after a first quarter 2.2% decline was revised upwards to 2.6%.

Economic development minister Ebrahim Patel said the DA was laying the ground for its election campaign and was using the recession to score political points. "It does not help to darken the cyclical economic story to make it much worse simply for short-term political gain," Patel said.

He said the "policy-divided" DA was using the recession to unite itself before the elections. In doing so the party ran the danger of trading in "hysterical rhetoric", he said.

Patel stressed that while the economy was in a fragile state not all sectors were in freefall.

"In SA the recession should be of relatively short duration compared to many other countries. It follows the second-longest period of growth in the past half century."

Patel said in the 12 months to June the economy grew 1.1% and in the second quarter of 2018 compared with the second quarter of 2017 the economy grew 0.4%. There was also other positive news on a sectoral basis in the growth numbers.

He referred to investments that the Industrial Development Corporation would make in the agricultural and manufacturing sectors and to the stimulus package that the state was putting together as examples of what was being done to address the economic situation.

Finance minister Nhlanhla Nene remarked that growth had been weak for some time, averaging 0.9% since 2014. Structural factors continued to constrain growth, including high levels of concentration that needed to be addressed. The foundation had to be laid for sustainable growth rather than adopting short-term measures.

With limited fiscal space at national level, the government would have to spend in a more efficient manner and ensure that the reprioritisation of resources supports economic growth. The main challenge remained low levels of investment, which required that consumer and business confidence be strengthened by means of policy certainty and the removal of blockages. Government departments were working on this and details would be released at the October investment summit and in the medium-term budget policy statement.

DA leader Mmusi Maimane said the economy was in crisis with just under 10-million unemployed and government debt of R3-trillion. SA was facing another ratings downgrade.

Corruption, revenue undercollection, never-ending bailouts for state-owned enterprises and a bloated public sector wage bill were all bringing the economy to its knees while populist policies such as expropriation without compensation, the nationalisation of the Reserve Bank and the proposed National Health Insurance scheme were a recipe for economic disaster.

But the biggest cause of SA’s economic troubles, Maimane said, was the ANC, which was the cause of the recession and had no plan to get SA out of it.

He said South Africans could choose state control under the ANC or individual and business freedom under the DA.

ensorl@businesslive.co.za