Business

SA out of recession, but too early to celebrate says Gigaba

2017-09-05 16:56

An improvement in Gross Domestic Product growth is encouraging, but it is not yet time to celebrate, said Finance Minister Malusi Gigaba.

Reacting to the latest GDP numbers which showed the economy grew 2.5% in the second quarter of the year, Gigaba said “we need to remain honest about the major challenges that still face the local economy".

"Poverty, unemployment and inequality, which are being underpinned by persistent low growth, remain the challenges.”

The StatsSA announcement earlier this morning that South Africa has exited a technical recession "is too early to suggest this is a longer term trend reversal", Gigaba said in a statement released by National Treasury.

However, the "data provides a platform that we can all build on for a more shareable growth path", he said.

READ: SA exits recession with 2.5% GDP growth

The latest GDP figures are an improvement of the contraction of 0.6% (adjusted) for the first quarter and the 0.3% contraction reported in the last quarter of 2016. South Africa had been in a technical recession given the contraction for two consecutive quarters.

Statistician general Pali Lehohla described growth in the agricultural sector as “shooting through the roof” by 33.6%. It contributed 0.7 of a percentage point to overall GDP growth.

Mining grew 3.9%, contributing 0.3 of a percentage point to overall growth.

During the briefing Lehohla confirmed that he would be leaving Statistics South Africa on October 31, but would not be drawn on further discussion of his departure. 

READ: LIST: SA's official 14-point plan to solve economic slump

“Government and the private sector are to work closer together to inclusively develop the South African economy. I will be working closely with anyone who shares the urgency for higher economic growth,” Gigaba said.

Treasury said it believed that the efforts of the 14-point Action Plan and continuing work through the economic cluster, could set the country on a higher growth trajectory.

Treasury also called on all stakeholder to continue working together in the interest of a robust and inclusive economy.

The Federation of South African Trade Unions (Fedusa) also welcomed the improvement in GDP, but was concerned that growth was still below targets of the National Development Plan (NDP).

“The 2.5% growth is encouraging and will assist us to come out of recession. However this level of growth is still below the 5.4% target that has been set down by the NDP for the period 2011-2030 in order to create 11 million much needed jobs for our young people,” said Secretary General Dennis George.

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November 19 2017