Statistics SA announced, last week, that the country had entered into a recession.
The Democratic Alliance (DA) has detailed what it says is its plan to improve the economy, following the recently-declared recession.
Statistics SA announced on Tuesday, 04 September, that the country’s Gross Domestic Product had decreased by 0.7% in the second quarter of the year. This follows a revised fall of 2.6% in the first quarter of this year.
A technical recession is defined by two consecutive quarters of a decline in economic activity.
DA leader Mmusi Maimane has said the recession was due to the ANC’s ineffective economic policy.
“This is not a recession borne of global economic conditions. This is a home-grown recession, borne of economic mismanagement and bad policy”, Maimane said.
The Minister of Finance Nhlanhla Nene has since assured South Africans that government is working on a plan to help the country recover economically.
Maimane cited two factors which he said contribute to the country’s deteriorating economy, namely; lack of investor confidence and five consecutive years of real per capita negative growth.
The DA leader said by implementing several things, including scrapping the proposal to nationalise the Reserve Bank, reducing the cabinet to 15, privatising South African Airways (SAA) and exempting small businesses employing fewer than 250 employees from complying with restrictive labour legislation, the economy may be able to get back on its feet.
The last time South Africa had experienced a recession was during 2008-2009 global financial crisis, which saw three consecutive quarters of economic decline.
Stats SA said the drop in GDP was largely attributed to agriculture production which fell by 29,2% in the second quarter of this year, after a 33,6% plunge in the first quarter of 2018.
“This [decrease in agriculture] was largely driven by a decline in the production of field crops and horticultural products,” said Stats SA.
Stats SA added that: “Continued drought conditions in Western Cape and a severe hailstorm in Mpumalanga, resulting in extensive crop damage, also placed additional pressure on production in the second quarter.”