SIZWE NXEDLANA: Stability is needed to beat low growth trap
Privatisation of state-owned entities and clamping down on wasteful expenditure will help reduce the fiscal deficit notably
GDP data released during the week painted a worrying picture of the economy. While the underperformance in the first quarter was anticipated, the extent of the slowdown was surprising, suggesting that 2017 may be another difficult year for South Africa. GDP figures showed that South Africa entered a technical recession, challenging our expectations of 0.7% growth for the year and also suggesting that the downturn in the business cycle which started in 2013 may not yet be behind us. In its assessment of South Africa the World Bank revised its growth expectations downward by half a percentage point and now expects the economy to expand by 0.6%. The broad-based contraction in the secondary and tertiary sectors confirmed that domestic demand is weak. While the improvement in the primary sector limited the rate of contraction - excluding the primary sector GDP contracted by around 2% - it was not enough to avert a recession.
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