After having barely skirted a technical recession the previous quarter, Statistics South Africa (StatsSA) have today confirmed that our economy has reentered decline during the first quarter of 2024.
In February, Treasury National Budget estimated a growth rate of 1.3% for 2024. Its projection, even though low and uninspiring, was evidently overly optimistic given that our economy has already shrunk by 0.1%. If the status quo remains, it means that expected revenue, already revised downward, remains overstated and even less money will be available for crucial expenditure on service delivery and social support.
Our economy will also find it difficult to grow at the projected 1.4% over the medium term, given the multitude of crises that beset every facet of the South African experience.
Crime and corruption, industrial scale mismanagement, an inefficient public procurement framework, and the energy crisis have crippled our economy, and South Africans are becoming poorer by the day as a consequence.
Despite having a growing workforce and a healthy demographic profile, South Africa has yet to achieve sustained economic growth. This crisis is a direct result of government policies that have prioritised state control over the economy, which hindered the growth-promoting forces essential for a thriving and enterprising economy.
The only positive takeaway from today's numbers is that South Africa's private sector continues to display resilience despite the Government's proclivity to crowd it out and reluctance to enact the requisite growth-friendly reforms. This is a testament to the sector's unrealised potential and what could be achieved with competent governance.
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To course correct sensible choices, that puts South Africa first, will have to be made. This is what will be expected of the next government.
If the Government were to implement the sensible growth-oriented policy reforms, it remains possible that we could realise economic growth rates comparable to our emerging market counterparts.
The starting point for such reforms is therefore the elimination of government-imposed obstacles to growth. An effective government is not one that seeks to control every economic lever but rather focuses on the successful delivery of essential services such as education, healthcare, infrastructure, defence, law enforcement, and a social security net. It is only then that we can create an economy that is both dynamic and responsive, and driven by market forces and individual agency.
The DA will therefore have economic growth in mind as it navigates the current post-election environment
