South African experts have called for speedy implementation of interventions to grow and restore business confidence in the economy following recession.
Many experts spoke to Xinhua after Statistics South Africa announced the country is on technical recession following the gross domestic product (GDP) declined by 1.4 percent in the fourth quarter of 2019.
The NKC African Economics chief economist Jacques Nel told Xinhua that poor economic performance is likely to see the country being relegated to sub-investment status.
“The latest GDP figures came in much worse than expected. It showed that the economy is on a much weaker footing than previously expected. Given that there is still a lot of uncertainty regarding the fiscal position particularly in relation to the government’s ability to follow through on wage spending cuts, we expect that a downgrade to junk status is imminent,” said Nel.
Nel said the electricity disruptions had negative effect on the economy.
“Energy supply uncertainty would also have deterred investment, resulting in either delays or project termination. The significant contraction in fixed investment spending was particularly disappointing, with hopes of a recovery in investment due to supposedly successful investment summits now well and truly faded,” he said.
South African Chamber of Commerce and Industry President Mtho Xulu told Xinhua that recession is a wake-up call for all stakeholders to “urgently” take corrective measures.
“Numbers don’t lie and this is a concerning reality to us as an economy. This is damaging the country’s image as an investment destination. There is an urgent need to be innovative and implement some measures to boost business and consumer confidence. It’s clear what we have been doing is not effective,” said Xulu.
He said it is “dangerous” for the country to perpetually hover on recession mode.
Ben de Klerk from the African Chambers Association (ACA) told Xinhua that business is under pressure because of the low performing economy. He said urgent structural reforms are required to boost economic growth.
In 2018, South Africa also went into technical recession but bounced back in the same year. Enditem