GDP contraction…the biggest decline in a decade

The ATM is alarmed at the news of much worse than expected first quarter GDP contraction by 3.2% – the biggest decline in a decade. The Rand almost immediately fell by 20c upon this bad news.

Manufacturing’s 8.8% decrease contributed -1.1 percentage points of negative growth, and the mining and quarrying industry contracted by 10.8%, -0.8 of a percentage point. Expenditure fell by 3.4% during the recording period.

South Africa again teeters on the edge of a recession – for the second successive year after the 2018 recession had been ended after two quarters. The year-on-year economic growth for the first quarter is 0%

Of particular concern is the enormous contraction in the agriculture sector – 13.2%

Only three of the ten measured industries had positive returns: Public Service (1.2%) and financial services, and personal services both 1.1%

The ATM’s goal of a truly decolonised economy aims to introduce, develop and implement policies that aim to boost economic growth through a more focused export promotion effort that would also be gentler on the environment, and create jobs. To incentivise and support export sectors to simultaneously encourage stronger economic growth and decrease greenhouse gas emission are obvious measures. Both the formal and the informal sectors of the economy need be restructured to prioritise and protect the citizens of the country.

We need to create conditions and to structure the economy such that it industrialises through manufacturing and beneficiation or processing of raw materials within South Africa instead of largely dependent on exporting raw materials, thereby creating much needed jobs.  Exporting raw materials is a recipe for poverty. South Africa must move away from being a price taker on strategic commodities.

Community co-owned mining companies need be established to enable the poor to benefit equally and fairly from minerals. Priority must be given to the disadvantaged to have ownership in emerging, and in new and established sectors of the economy, including mining and manufacturing.

A state-owned bank linked to communal banks is one certain way of changing the structure of the country’s banking sector and also give the marginalised communities ownership and access to financial services such as insurance and underwriting.

Elementary remedies include financial and other support to SMMEs, including subsidisation of the Taxi Industry, and training and funding of community-based entrepreneurs. Government should be compelled to procure from local SMMEs. All tenders must carry a contractual quota of livelihoods – subcontracting and job creation.

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