Johannesburg - The ANC has called for a collective action in pursuit of economic growth and job creation to help avoid full blown recession.
The party was reacting Tuesday’s announcement by Stats SA that the country had slipped into technical recession after GDP growth for the second quarter went down by 0.7% in the second quarter of this year, following a 2.6% initial contraction in in the first quarter.
ANC head for economic transformation Enoch Godongwana said looming economic turmoil was being triggered by and declining growth in fixed capital investment, a persistent current account deficit, and household consumption expenditure that had declined.
“These are reinforced by the decline in household consumption expenditure, which is the largest component of aggregate demand, which explains the poor performance of the wholesale and retail trade sector,” Godongwana said.
According to Stats SA also pointed out that household spending decreased for the first time in the second quarter of this year since 2016, going down by 1.3%, as South African consumers tightened their purses.
Recent government interventions in the first quarter of this year, including the VAT increase and the sugar levy – including the petrol hikes – have been blamed as major contributors to the drop in consumption of goods.
Godongwana said unemployment was also compounding the problem.
“We have an aggregate demand problem. The capacity of the economy to create employment faster than the growth rate of the labour force has been slow. The slow growth challenges require a coherent and a multifaceted response to ensure that our economy is strengthened to provide decent work,”Godongwana said.
He said the government would have to undertake the following decisive interventions, including the stimulus package that was proposed by the ANC NEC Lekgotla in July for the ailing economy.
“Our macroeconomic policies must act in concert in the interest of the overarching goal of economic growth and development. More than ever, we will have to closely coordinate fiscal and monetary policy so as to foster sustainable growth,” Godongwana said.