The GDP figure for the 1st quarter 2015 shows that South Africa urgently needs Growth
By Vivian Atud
If you know anything about statistics- you would know the saying “let the data speak”. Contrary to rhetoric by politicians and government officials that things are getting better, data released by Stats SA on Tuesday showed that South Africa’s real gross domestic product (GDP) at market prices increased by a mere 1,3 per cent during the first quarter of 2015 compared to an increase of 4,1 per cent during the fourth quarter of 2014.
The main contributors to the increase in economic activity for the first quarter of 2015 were the mining and quarrying industry (contributing 0,8 of a percentage point), finance, real estate and business services (contributing 0,7 of a percentage point) and the wholesale, retail and motor trade, catering and the accommodation industry (contributing 0,2 of a percentage point).
Negative contributions were recorded by the agriculture, forestry and fishing industry (-0, 4 of a percentage point) and the manufacturing industry (-0, 3 of a percentage point) – the report showed. Enough of the bad news, the question is why is South Africa failing consistently to meet growth expectations? Let me start from the obvious answer to this question while attempting to also make my own opinion.
Research by observation tells us that we cannot ask businesses to switch off power and expect them to produce goods and services at growing rates. There is urgent need to bring the prolonged load shedding to an end.
Secondly, South African companies are battling to sell as demand weakens due to increased pressure on consumers compounded by higher unemployment and inflation.
Thirdly, a Reserve Bank indicator suggested the economy would still struggle in coming months. The leading indicator fell to 98.5 in March from 98.7 in February.
Government is finding it difficult to get good news out of data despite its hope that the economy will do well given that it has started to implement the National Development Plan (NDP).
Another interesting spin from the data was the 0.8% contraction in government services, the first quarterly decline since 2004, was unexpected.
According to Stats SA public servants left the sector in droves this year over concern pension reforms would lower the amounts they would receive on retirement.
The pension-reform “scare” had a major effect on growth numbers, Statistician-General Pali Lehohla said, and public servants who withdrew their pensions had acted before the actual outcome of the reforms.
It is time to stop rhetoric about the wishes for the economy by government officials and actually take actions that will grow the economy. Challenges in mining need to be dealt with urgently. The same applies for load shedding and power supply issues. South Africans expect more leadership from the public sector to promote growth and an enabling business environment than is currently experienced.