This warning comes from the from CEO of the Institute for Race Relations Dr Frans Cronje after data released last week showed a sharp contraction in economic growth in the first quarter of 2016. The data released by StatsSA showed a contraction of 1.2%.
Cronje says “central to the decline are contractions in mining and agriculture. Both sectors are being undermined by hostile and counter-productive policymaking. Ideology is still too dominant a factor in government policymaking and there is a reluctance to accept that ideology does not work in the real world. Despite statements about the importance of growth there is very little on the policy front to suggest that the Cabinet is serious about securing an economic turnaround”.
“What we would like to see in the next quarter is certainty around mining policy, changes to labour legislation – specifically the introduction of strike ballots, a reworking of foreign investment protections, and a complete redraft of pending expropriation legislation. The labour market needs to see a significant degree of deregulation, empowerment policy must be sculpted so as not to deter investment, and property rights need to be secured. Without these steps South Africa will not secure the investment to drive higher growth and employment rates. If these steps are not taken it is difficult to see how South Africa will avoid entering a recession which would almost certainly trigger a sovereign rating downgrade by year-end putting the country into a sharply negative economic spiral”.
