Finance Minister Malusi Gigaba is set to meet with business following news that South Africa’s Gross Domestic Product (GDP) contracted by 0.7% in the first quarter of 2017 putting the country into recession.
“The Minister of Finance Malusi Gigaba will be seeking a meeting with business leaders soon to discuss ways of working together to achieve inclusive economic growth,” said National Treasury.
This, as Statistics South Africa (Stats SA) released GDP figures on Tuesday. The GDP rate was down from 0.3% in the fourth quarter of 2016.
At a media briefing, Stats SA’s Joe De Beer, the Deputy Director-General responsible for economic statistics, announced that the country is into recession with a negative growth in the first quarter of last year and the first quarter of 2017.
National Treasury said the worse than expected 0.7% contraction in the first quarter of 2017 introduces significant downward bias to the GDP growth estimates communicated in the 2017 Budget Review, which projected 2017 GDP growth at 1.3%.
Despite the GDP contraction, there are green shoots that South Africa can leverage on to boost its own economic growth outlook, said Treasury.
- Improving global growth;
- Stabilising commodity prices;
- More favourable climate conditions;
- Reliable electricity supply; and
- Less volatile labour relations
“The current growth rate, if sustained, will lead to a further decline in GDP per capita and revenue, risking the sustainability of our fiscal framework and more importantly undermining the delivery of social services.”
National Treasury said the current state of the economy puts more pressure on government, business, labour and society.
“The current state of the economy puts more pressure on us as government, business, labour and broader society to intensify our growth programme and improve confidence as a matter of urgency to arrest the decline and set the economy on a higher growth trajectory,” it said.