The African National Congress has noted the release of the second quarter of 2020 GDP numbers by StatsSA. In terms of these numbers South Africa’s GDP shrank by 51% on an annualized basis. That means the actual decline from the first quarter was 16% (seasonally adjusted). The biggest drop in value added occurred in construction, manufacturing and mining, which shrank 30% over the previous quarter, while trade and logistics contracted 25%. Business, personal and government services declined between 0% and 10%, and agriculture grew 4%.
These figures are not unexpected and they reflect the impact of the COVID-19 pandemic and the necessary measures undertaken to curb the spread of the virus and save lives. In order to avoid an out-of-control contagion, South Africa instituted a nationwide lockdown in March, with limited recovery in May and June. The decline mirrors similar devastation throughout the world economies battered by the Coronavirus and does not come as a surprise as the economies were shut for a considerable period.
Following the gradual easing of lockdown regulations, we expect the third quarter of the year to show a much stronger performance.
The ANC reiterates that the foundation for economic recovery is to continue to control the pandemic, since it cannot just be wished away. To date, South Africa has been extraordinarily successful by international standards in controlling the pandemic. Every citizen must help protect this achievement by using masks when in public and avoiding unnecessary gatherings, especially indoors. We also need to reemphasise that the South African economy was already in a precarious state even before the pandemic.
As outlined in the ANC’s document titled: “Economic Reconstruction Growth and Transformation:, the ANC is committed to ensuring that the recovery from the pandemic goes hand in hand with reconstruction that ensures more inclusive and equitable growth.
Critical elements of our recovery and reconstruction programme include amongst others:
• Ensuring a more reliable and affordable electricity supply, which in turn requires fast-tracking access to new sources in order to ensure that Eskom can undertake the necessary maintenance and repairs;
• Increasing investment in infrastructure, with an emphasis on meeting the needs of our communities and small business;
• Urgent interventions to promote mass public employment to cushion working people and low-income communities against the downturn while maintaining domestic demand.
• Support for localisation and industrialisation;
• Taking advantage of opportunities in the green economy interventions
• Ensuring that all learners and workers have access to the competencies they need to take advantage of economic opportunities; and
• Development of Master Plans to promote more dynamic and inclusive growth in key industries in our economy.
The success of the economic recovery and reconstruction effort will depend on among others:
• Maintaining government spending while redirecting it toward critical programmes for economic and social development;
• Effective resource mobilisation including crowding in private sector investment in infrastructure delivery and human capital as well as mobilising the savings industry to invest in high impact developmental projects;
• Ensuring more effective use of the credit guarantee scheme established with the major private banks to promote growth and ensure business continuity as far as possible; and
The national response to COVID-19 has highlighted the opportunity to build social compacts in order to reset the country’s economic and social path.
The R500 billion emergency relief package announced by President Cyril Ramaphosa in April went a long way to alleviate the worst effects of the pandemic on livelihoods.
Over R40 billion has been paid to more than 4 million workers through the Unemployment Insurance Fund to prevent retrenchments, and more than 5 million beneficiaries received the Special COVID-19 Grant for Social Relief of Distress.
A total of R25 billion has been paid through top-ups to existing social grants, as well as an additional Caregivers Allowance for recipients of the Child Support Grant.
Moreover, tax relief worth over R70 billion has been extended to businesses in distress. These and other measures have provided necessary relief to vulnerable individuals and businesses across the country.
The government is due to finalise its Economic Recovery Strategy, which will draw on this social compact and outline a clear, action-oriented plan to stimulate economic growth and enable a rapid rebound.
We believe the most important component of that strategy will be to protect and create jobs to ramp up the economy with visible urgency.
ISSUED BY THE AFRICAN NATIONAL CONGRESS
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