GDP slump underlines pressing need for real economic reforms – IRR

Press Release 

South Africa’s 2% slide in GDP underlines the inescapable challenge facing President Cyril Ramaphosa’s administration: far-reaching economic reforms are unavoidable if South Africa is to stage an economic recovery.

What is clear is that the GDP contraction – with the mining and manufacturing sectors being the largest contributors, contracting by 21.5% and 8.5% respectively – is a consequence not of the Covid-19 pandemic, but government policy that is hostile to growth and investment.

As much as the ANC might want the public to believe the pandemic is to blame, we know that the data reflecting the GDP decline does not include post-lockdown data.

Yet, despite our shocking unemployment rate – 30% and climbing – Finance Minister Tito Mboweni’s emergency budget offered no indication that the government is willing to embark on the far-reaching policy reforms which remain the only guaranteed means of growing the economy and providing jobs and hope to the millions mired in poverty.

The likelihood is rather that the Cabinet will shepherd South Africa into a deeper recession amidst significant job losses and declining standards of living. This will cause further credit rating downgrades, which will only increase the cost of capital and condemn South Africa to a continuing downward economic spiral.

Said IRR Deputy Head of Policy Research Hermann Pretorius: "The case for urgent pro-growth, pro-enterprise government policies has never been stronger, yet the government's willingness to divorce itself from poisonous command-economy ideology has never been weaker. South Africans must now be bold in generating pressure on the government to see reason, to acknowledge that you cannot borrow your way out of debt, or spend yourself out of insolvency. The IRR's global awareness initiative to expose the ANC's dangerous policy addiction to IMF donor nations aims to achieve exactly that."

Media contact: Hermann Pretorius, IRR Deputy Head of Policy Research – 079 875 4290; hermann@irr.org.za
Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za
Kelebogile Leepile Tel: 079 051 0073 Email: kelebogile@irr.org.za
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