SOUTH AFRICA IN ECONOMIC STAGNATION: SECOND QUARTER GDP DATA FAILS TO REVEAL THE TRUTH: IS THE COUNTRY IN RECESSION?

Abstract

The paper attempts to speak to the title of the paper. In so doing it will analyze the data put forward by the government as the economy posted a 0.7 percent second quarter growth, from the first quarter’s 0.6 percent. This is no growth at all. The government and its ideologues claim that South Africa has staved off recession but, in actual fact Gross Domestic Product (GDP) data has failed to reveal the truth. In actual fact there is not much to celebrate. Technically speaking economists have pointed to stagnation of the South African economy. South Africa praises itself in terms of its macroeconomic policy and strong institutions. This is no feather in its cap and is a ploy of playing to the gallery for purposes of investment. Whether South Africa likes it or not downgrades are important considerations of the international economy and it therefore, cannot wish away such analysis because it damages its reputation and image on the international stage. Amidst this crisis and the collapse of African Bank, the issue is why did this happen and was the downgrade justified and, the rescue of the bank by the Reserve Bank evades key Questions. On the other hand central banks are trapped by their rescue schemes, the paper argues. There is a possibility in the very near future that South Africa’s four major banks could face downgrades, if the government does not deal with the vexing issues of corruption, unemployment that stands at 25 percent, (This is a government figure, but others claim categorically that unemployment stands above 40 percent) increasing inequality, worsening poverty and the escalation of service delivery protests. The paper therefore unpacks the horrific scale of hunger in South Africa, amidst the South African economic crisis. It is against this background that the paper will analyze the issues alluded to.