Economy will grow when government stops interfering, says Solidarity after GDP shock
THE CITIZEN / 04 JUNE 2019 - 08.27 / ANA REPORTER
Solidarity also expressed concern about the state of the mining industry, which shrank by 10,8% in Q1 2019.
Trade union Solidarity said on Tuesday that the country’s latest GDP figures were an indication that the markets were not buying into president Cyril Ramaphosa’s New Dawn philosophy, and that for the economy to grow, government had to stop interfering in business matters.
President Cyril Ramaphosa announcing his new Cabinet at the Union Buildings in Pretoria, 29 May 2019. Picture: Jacques Nelles
“Solidarity was shocked to learn that the latest GDP figures performed even worse than the pessimistic forecasts. Although analysts and experts agreed that we would indeed see a contraction for the first quarter of 2019, Solidarity was appalled when the quarterly decline of 3,2% was announced,” said Morné Malan, senior researcher at the Solidarity Research Institute.
Malan said “the most frightening aspect of the figures” released by StatsSA was that gross fixed capital formation had decreased for the fifth consecutive quarter.
“In other words, since President Ramaphosa’s election as ANC president at the end of 2017, we have only seen a steady decline in the market’s willingness to invest in the South African economy over the long term,” said Malan.
Solidarity also expressed concern about the state of the mining industry, which shrank by 10,8% in Q1 2019, after also contracting by 8,9% and 3,8% respectively in the previous two quarters.
“It is no coincidence that the contraction in other sectors goes hand-in-hand with growth in general government services. This sector has grown the most, and it remains our main cause for concern that this growth comes at the expense of the productive sectors. The state is becoming more inflated by taking more money out of the economy, which is put to poor use by creating even more barriers for the private sector,” Malan said.
Ramaphosa had to “urgently apply himself to get rid of the ruling party’s countless policies that are not conducive to the economy”, said Solidarity.
“It is not just expropriation without compensation; it is the over-regulation of the labour market; it pertains to the obstacles put in the way of starting new businesses; the minimum wage; it is black economic empowerment; the Mining Charter and other charters. There is almost no end to the list,” said Malan.
“There is a myriad poor, counterproductive policies, and the fact is sweet talk does not make business any easier. The solution for Mr. Ramaphosa and his new cabinet does not lie in urgent interventions at all, but urgent withdrawal from the economy and from what is the business of businesspeople, instead. Government caused the problem through its superfluous involvement in the economy. Only they can solve it by less interference in the economy.”
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER