ANC targets broader central bank mandate after GDP shocker

ANC official says Sarb should target jobs, growth.
ANC secretary-general Ace Magashule says the Sarb should target jobs, growth. Picture: Neil McCartney

South Africa’s governing party has agreed to expand the central bank’s mandate to include employment and growth as well as inflation, a senior party official said on Tuesday, hours after data showed the worst economic contraction in a decade.

The rand extended losses after the comments from African National Congress (ANC) Secretary General Ace Magashule, as investors are nervous about any changes that could curb the independence of the South African Reserve Bank (Sarb).

“The National Executive Committee lekgotla (meeting) agreed to expand the mandate of the South African Reserve Bank beyond price stability to include growth and employment,” Magashule told a news conference.

The central bank could not immediately comment.

Magashule said the ANC executive wanted the government to set up a team to explore quantitative easing, after the statistics office said gross domestic product contracted a quarterly 3.2% in the first three months of 2019.

The shock GDP reading lagged the 1.7% decline economists had expected and was another sign that President Cyril Ramaphosa’s growth drive is struggling to gain traction.

The rand was more than 2% weaker against the dollar by 13:00 GMT, reflecting worries about the weak economy and potential changes to the central bank’s focus.

“This was the largest economic contraction in almost a decade. … It was largely driven by manufacturing, then mining,” Statistician General Risenga Maluleke told a news conference.

Investor confidence in Africa’s most industrialised economy remains fragile, despite Ramaphosa’s pledges to woo investment, create jobs and root out rampant corruption after his party won re-election last month.

He faces formidable obstacles, including factional fighting within the ANC, weak consumer demand and ailing state firms like power utility Eskom, which was forced by capacity constraints to impose blackouts early this year.

Ratings risk

Although Moody’s still has South Africa’s credit rating at Baa3, the lowest rung of investment grade, economists fear the power crisis will ultimately cost the country that rating and lead to billions of dollars of outflows.

Fixing the problems at Eskom and another loss-making state-owned firm, South African Airways (SAA), is seen as critical to shoring up confidence among the investors South Africa relies on to finance its big budget and current account deficits.

“The South African economy is not doing well, there are all these false starts where we think the economy is just about to re-accelerate and then it drops back again,” said Cristian Maggio, head of emerging markets strategy at TD Securities.

“The government really has very little time to start doing what it has to do.”

Statistician Maluleke said load shedding — a local term for controlled power outages — had contributed to the economy’s decline in the first quarter.

Tuesday’s data showed mining output dropped 10.8% in the first quarter from October-December. Manufacturing output fell 8.8%, agriculture dropped 13.2% and construction declined 2.2%.

But output edged up 1.1% in the finance sector.

Year-on-year growth in the first quarter was zero compared with forecasts for growth of 0.7%, the statistics office said.

A recent Reuters poll forecast the South African economy would expand by around 1% in 2019 as a whole, compared with growth of 0.8% last year, although analysts are likely to revise that view in light of the new data.

Even that level of growth would be insufficient to make a meaningful dent in poverty and unemployment or reduce severe inequality, which persists in South Africa more than two decades after the end of white minority rule.

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Desperate.

What is nice is you can always count on these buggers to come to the party and do something so stupid it is unbelievable.

Short SA Inc is paying off smartly.

The news channels don’t even stick around for the full news conference. I take it they are trying to protect what dignity South Africa still has left by not broadcasting this rubbish. Who in his right mind believes they can reduce 27% unemployment to 14%? The population is growing at close to 2%. They have never said a word about that.

Desperately stupid.

Unemployment is around 50% and the real GDP number is 65% bigger than what is currently stated.

This all translates into South Africans per capita currently being overstated.

I wonder if Cyril’s “advisers” shorted ZAR on his behalf? Ace’s?

I have a solution for your unemployment statistic:
We already pay social grants to x million people.
So, you sign them on as employees of the state, the grant becomes a salary and you reduce unemployment by x million.
That should give you a nice 10 – 15 % unemployment. rate.
See – easy peasy.

State capture (disguised) alive and well…

The ANC’s economic illiteracy knows no bounds…

Expect a New Dawngrade by the end of the week, if not sooner.

Ace, an actual practicing gangster, about whom a whole book was written and recently published by an A-grade investigative journalist is now ‘soothing’ the market!!!?!!. This is a level of stupidity and arrogance plumbed only in South Africa, a once great country, now dropping vertically down any measurable commercial metric, like the kanga of any maiden in the presence of Jacob Zuma

The more Government interfere, the more they mess it up.
Don’t they get it ?

I know we will all suffer but I will feel euphoric when the rating agencies and the rand punish this man and his president cadre.

They will feel nothing – they’ve done their milking of SA inc and it’s the middle class, people paying school fees, businesses like farming, etc, who will pay the price. There’s no punishment for them – that’s what’s so bad about this.

“Even that level of growth would be insufficient to make a meaningful dent in poverty and unemployment or reduce severe inequality, which persists in South Africa more than two decades after the end of white minority rule.”

I love how this is the standard sign off. Stop being an idiot, you cannot fix inequality with BEE, transformation and similar strategies. You fix it by investing tax revenue into the countries infrastructure, education, healthcare and other basic services. It takes long term planning and uncomfortable decisions, whilst also absolutely wiping out corruption and incompetent governance.

The ANC has not acted in that way the past 2.5 decades and has instead focused on short term power grab moves whilst taking as much cash as they can and rewarding the less capable people in the country with high powered roles.

That is why we have Eskom falling over, no apetite to make the difficult decisions whilst also employing a series of corruption/incompetent manager teams whilst also allowing corruption into huge capital projects. Easy way to get to junk.

You get the governance you deserve and SA’s voting is coming back in a predictable way.

Am so sick of Zuma parading around asking innocently ‘What did I do?’ The answer is, ‘You wrecked an entire country with your greed and stupidity, along with your corrupt mates, the Guptas, and many ANC head honchos who still hold political positions. YOU ROBBED THE POOR’. Absolute fact! Now the only thing that will save South Africa is Ramaphosa biting the bullet and taking some very unpopular decisions. He has been inaugurated. The time of waiting is now over. He needs to get the bad guys prosecuted (by means of their tax affairs if necessary for quick decisions). He needs to free up the market, get rid of SAA and speed up the process of unbundling Eskom, opening up the market to renewables. Then fixing Home Affairs and our counter-productive visa system. Plus cutting down on the ridiculous Communist philosopy that still pervades the ANC. Does the ANC not understand that Communism (which kills vital private enterprise) has destroyed and been kicked out of over 50 countries? It is an epic fail, proven by history; a totally destructive philosophy that has NO place in a modern society. Can we not learn from history???

as always they all agree but will not be able to implement…Crisis like this and US will act..SA will blame the West, blame colonialism, hold many legotlas, talk and do nothing, be stopped by union demands……. as said before to all the socialist/ commies driving big black BMW’s

US Capitalism = 3,8% unemployment
SA HellKnowsWhat = 28% unemployment

Learn something from this

So with SA in a 3.2% y on y decline, that is a delta of 7% off the USA.

The ANC is like a man with syphilis who thinks the more people he sleeps with the greater his chance of being cured.

When they say they want to “expand the mandate to create jobs”, everybody knows they actually mean they want to secure stable cash flow to the looters. The independence of the Reserve Bank is “Custer’s last stand” for our economy.

They looted the SOE’s into bankruptcy and now they turn to the next best thing. The ANC is dead without social grants and BEE. Social grants and BEE is dead without economic growth. Economic growth is dying because of ANC policies. This attack on the Reserve Bank is a desperate attempt by the ANC to resuscitate the ANC, while it is strangling itself to death.

It’s disguised state capture of a finance institution – they have to change the constitution to do it, but with EFF backing they’ll get it through parliament. Magashule obviously hasn’t finished looting.
Remember the ReichBank in Germany under Hitler – stories about how the bank was run by Nazis and gold stashes? And for the EFF VBS wasn’t big enough.
Politicians running a central bank – imagine!

I think you guys made a mistake. You took the ANC statement seriously. If you look at the most telling part, halving the unemployment level to 14% in 5 years this is obviously an April 1st joke, released too late, thanks to some cadre’s bungling.

I liked the part where they want to explore quantitative easing! Imagine an ANC cadre deployed as an EE candidate in charge of Quantitative Easing! This is what I like about the ANC, they always make time for a little sick joke.

What they understand by quantitative easing is that it’s a means of printing oodles of money….

Ah yes, quantitative easing aka money printing.

Time to buckle down boys and girls, hyper inflation is revving for take-off

Woo investors, create jobs and grow the economy, such clever words. Let’s look at really mr Rhamaphosa, your SEO’s cause power reduction of x%, labour sanctioned strikes a production reduction of x%. Yet you expect growth of x%. By that logic lets paint stones gold and sell em to China? If Eskom buys ruble as coal you can only hope others are as stupid..

Woo investors, create jobs and grow the economy, such clever words. Let’s look at really mr Rhamaphosa, your SEO’s cause power reduction of x%, labour sanctioned strikes a production reduction of x%. Yet you expect growth of x%. By that logic lets paint stones gold and sell em to China? If Eskom buys ruble as coal you can only hope others are as stupid.

unemployment to 14% in 5 years…maybe the quantitive mistake in their statement is actually correct…only way for them do drop unemployment is to get rid of the unemployed.

Thanks Ace,

Your uneducated voters may have given you the thumbs up but the markets and the real money gave you a big thumbs down today.

Fortunately for the ANC, their voter base will follow them over the fiscal cliff just like Zim. Even after 50% GDP contraction, unemployment at 95% and hyperinflation voters kept voting Zanu PF into power.

The same will follow in South Africa.

Why listen to these on the job trainees’ that have brought the country to junk???????History will look very scathingly on these leaders. No streets named after you !!!!!!!!

Ace can teach economics to his fellow inmates.

End of comments.

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