President Cyril Ramaphosa has vowed that it will no longer be business as usual when it comes to rebuilding South Africa’s economy.
He was reacting to Statistician-General Risenga Maluleke’s second-quarter gross domestic product (GDP) report released earlier on Tuesday.
According to Maluleke, South Africa’s economy contracted by 51 percent in this year’s second quarter compared to the same period last year. The contraction was 16.4 percent compared to the first quarter of this year.
‘Can’t continue with business as usual’
In a statement, Ramaphosa said, “Now is the time to act quickly and boldly to place South Africa on a rapid growth trajectory. We cannot continue with business as usual. We will use this moment of crisis to build a new economy, and unleash South Africa’s true potential.”
The President said the deep contraction was mainly caused by the lockdown implemented in March to help curb the spread of COVID-19. Countries around the world have experienced similar contractions, he added.
Three processes are underway to ensure South Africa’s economic recovery. “First, social partners will soon present a Social Compact on Economic Recovery to the President following discussions at the National Economic Development and Labour Council (NEDLAC). This social compact identifies areas of convergence, and provides a basis for joint action by all partners,” Ramaphosa said.
The government will then finalise its economic recovery strategy based on NEDLAC’s social compact. Focus will be on fast-tracking structural reforms, expanding employment, facilitating infrastructure investments, and promoting localisation and African trade.
“Finally, the Presidential Employment Stimulus will commence implementation within the next month, and will expand opportunities through public and social employment to counteract job losses,” the Presidency explained.
7% GDP contraction expected in 2020
National Treasury estimates that the economy will contract by at least seven percent in 2020, with millions of jobs already on the line. This is despite the lockdown being gradually eased as from May.
The government has been implementing a R500 billion economic and social relief package to cushion South Africans and businesses from the lockdown’s impact. Ramaphosa said more than R40 billion has been paid to over four million workers through the Unemployment Insurance Fund (UIF) employer/employee relief scheme (TERS).
R25 billion has also been paid as top-ups to existing social grants. Five million people have received the COVID-19 social relief of distress grant so far.
The government has further provided tax relief measures worth R70 billion to affected businesses and facilitated more than R15 billion in business loans through the R200 billion loan guarantee scheme.