President Cyril Ramaphosa must have felt like King Canute this week as on the one hand he was securing a $60 billion aid and loan package from China to steady South Africa, while on the other the tide of recession rose without check to wreak havoc on all the country’s economic indicators.
Under these conditions South Africa will struggle to register any growth for 2018, and Ramaphosa’s dream of boosting growth to three percent this fiscal year has now turned into a nightmare, not only economically but politically.
The rot of the Zuma years runs to the core of every aspect of the state, and those who imagined that Ramaphosa, faced with a volatile and hostile global climate and the legacy of theft and economic sabotage, would be able to chart a new course immediately must be finding themselves sorely disheartened.
If they look closely at the elements which caused the damage to the GDP figures, they will be even more disheartened.
Real gross domestic product decreased by 0,7% in the second quarter of the year, on top of a contraction of 2,2% in the first quarter, resulting in the first technical recession since the 2008/2009 global financial crisis.
The largest negative contributors to GDP growth were the agriculture industry, which decreased by 29,2%, largely brought on by the drought’s impact on the horticulture industry, followed by transport (-4,9%) and trade (-1,9%).
Agriculture, in spite of all the hot air about its economic growth and employment prospects, and how land reform will turbo-boost it, makes a minuscule contribution to GDP at the best of times. That the economy is so fragile that so small a factor can throw it so badly off its stride is of serious concern.
Finance Minister Nhlanhla Nene has promised that a plan to stimulate growth, including some structural reforms, will be presented to Parliament by the end of next month.
It had better be more than warmed over electioneering.