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SA economy to shrink by more than government’s 7% forecast in 2020 – Mboweni

Following strict coronavirus lockdown.
Tito Mboweni. Image: Dwayne Senior/Bloomberg

South Africa’s economy will likely contract this year by more than the 7% previously forecast by the Treasury, Finance Minister Tito Mboweni said in an opinion piece published on Sunday.

Gross domestic product shrunk by a record 51% in the second quarter, its fourth quarterly contraction in a row, as a strict lockdown to curb the spread of the coronavirus saw activity grind to a near-standstill.

“The contraction in growth is larger than anticipated by the National Treasury and the SA Reserve Bank, which raises the risk that the actual GDP outcome for this year could be lower than previously thought by both policymakers and the broader market,” Mboweni wrote in the piece published in the City Press weekly newspaper.

In July the Reserve Bank cut its 2020 forecast for GDP to a 7.3% contraction. In its emergency budget in June, the Treasury pencilled in a 7% decline, but some analysts see a double-digit contraction.

In his article Mboweni, brought back to cabinet by President Cyril Ramaphosa in 2018 after more than a decade in the private sector, said his office would speed up reforms, by easing regulatory hurdles and allowing more private investment in the public sector, especially in electricity.

State utility Eskom, which provides around 90% of the country’s power, has struggled for years to meet demand, unleashing nationwide blackouts to keep the grid from collapsing.

With debt of around R500 billion and heavily reliant on bailouts from government, Eskom has regularly been cited as the main threat to the economy and fiscal stability.

The government has long been criticised for its slowness in dealing with Eskom. In the article, Mboweni said the government would move with greater speed via “Operation Vulindlela” (open the way), a joint initiative between the Treasury and the presidency announced in his budget speech in June and aimed at accelerating structural reform. He did not give details of the plan.

“It is not another new plan. It involves implementing existing commitments through mechanisms to escalate challenges and fast-track implementation,” Mboweni wrote.

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We’ve lost 50% in the second quarter alone. 50% / 4 = 12.5%, which is much more than 7 %.

Then we also lost nearly all foreign tourists in the third and fourth quarters.

Tito some advice from a tax payer to a politician

Create an environment for SMME’s to flourish, forget about Corporate, enough has been done through BEE..Their course is set

Put incentives in place for SMME’s to employ labour and put your money where your mouth is

Abolish so called transformation within SMME’s! As it stands this sector employs more disadvantage people than you and Government care to believe..From restaurants,B&B’s and Agriculture and many more

If your policy of equity employment continues with SMME’s, you’re stifling growth and killing the goose that lays the golden egg

Start with workshops which YOU AND Cyril attends so you can better understand how important minorities are to the fiscal.
Talk to people on both sides of the colour spectrum and you will soon realise that Politicians and party’s like the EFF are the cause of racial distancing

With your policy of BEE, you have forced minorities to become entrepreneurs, losing skill and knowledge so much needed in your Parastatals

Use this to your advantage, you’ll be amazed at how we will come together to make this country great again

Your Government’s direction and policies areset to destroy the very prosperous SMME’s that’s as important as Corporate, if not moreso!

Take heed Tito for our time is running out and the High Noon will be upon us all before we can save anything

And it will further degenerate until the Quarterly 51% arises as the Annual figure. The more the economy gets controlled by the government the more it shrinks, the more economy shrinks the more that that government wants to control it.

Government needs to refocus its priorities to that of Creating Law and Order.

Even though there are no countries which run a completely free economy the few which run their countries above the 75% mark tend to have the highest growth; development and wealth. South Africa scores a miserable 58.8% ranking at 106 globally and 12 in Africa. This said the report considers South Africa un-free economy.

Rule of law score very low regarding:
Property Rights 58.4%
Judicial Effectiveness 38%
Government Integrity 46.6%

The report link is here for everyone to view including the president and the Finance minister.

https://www.heritage.org/index/country/southafrica
https://www.heritage.org/index/ranking

Comrade Tito and Comrade Cyril like to put on shows and sell dreams. Consistent modus operandi. Deceive deceive deceive do nothing.

Maskirovka

Except which comrade is going to get the next tender/contract.

Government cannot actually forecast anything

Another plan with zilch details because they know its chance of implementation is nil.

Ya

It will be 17.5 to 18 %

SAMs view 17% too steep. Mining and agriculture will decelerate the decline -I am at 10%-max 12% -which is dreadful and with a growing population a GDP per capita drop of about 15%

You ain’t seen nothing yet….

If you REALLY want to see the utter disaster that is the SA Economy let an economist run the numbers without Government spending and compare that to previous quarters/years.
That will show a shocking figure and will indicate the complete disaster the economy is. Government spending is a drag on the economy. They dont generate any growth, just suck the life out of the private sector who is creating growth.

End of comments.

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