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Pressure mounts on economic transformation in South Africa
July 2, 2017, 1:07 pm

With the South African economy moving into recession for the first time in eight years, doubts have been cast about the country’s ability to sustain its economic transformation drive. Official data from Statistics South Africa published last week showed that the country’s economy contracted by 0.7 percent in the first three months of 2017, following its shrinking by 0.3 percent in the fourth quarter of last year.

In a press-briefing on Thursday, South African Finance Minister Malusi Gigaba said it would be a mistake to react to the recession by focusing only on the growth of established business and letting economic transformation fall by the wayside.

Saying that the bleak economy should not curtail economic transformation, the minister said, “The National Development Plan (NDP) says we need both, inclusive growth and economic transformation. You cannot do one, without the other. They are mutually reinforcing."

According to Mr. Gigaba, South Africa is at an inflection point. "We can choose to be negative and pessimistic, or positive and optimistic. As National Treasury we believe the glass is half full, not half empty."

He stressed that government remains committed to maintaining the fiscal framework and this assurance should also be noted by ratings agencies which remain concerned about this.

On June 6, South Africa entered its first recession since 2009 when its GDP contracted for a second consecutive quarter. But South Africa has pulled out of recessions in the past; since 1961 the country has been in recession eight times.


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