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Recession of SA’s economy to affect region – Sichinga

COMMENT - No policy reversal - in other words, more Thatcherite neoliberalism. The reason they have not been able to deliver to a far greater extent, is that the South African government abandoned the Freedom Charter, which includes the redistribution of the land that was stolen under apartheid. So how do you like you neoliberal economy now, Mr. President?

Recession of SA’s economy to affect region – Sichinga
Written by Chiwoyu Sinyangwe

THE recession of South Africa's economy is going to affect the region and the truer picture of the impact will be known after next year's World Cup, business consultant Robert Sichinga has said.

And the African Development Bank (AfDB) has said South Africa's economic recession is an admission by the government that it may not provide the services envisaged in the medium term.

Last week, South Africa officially announced that Gross Domestic Product contracted in the first quarter, pushing Africa's biggest economy into recession for the first time in 17 years.

Commenting on the development, Sichinga said it was difficult currently to see the impact of the recession in South Africa because of the 2010 World Cup, as there was so much construction in the economic powerhouse of the continent.

"Many of us might not see the recession as we pass through Johannesburg and other industrial cities in South Africa. You can't see that recession because of the 2010 games, there is so much construction going at the moment," Sichinga said.

"Nevertheless, it does mean that there is a slowdown in the amount of development and industrial production in South Africa, and we need to distinguish between infrastructural aspects as well as industrial output. There will be slowdown in industrial output and what that means is your units costs are going to be higher and there are certain commodities you cannot stop importing because they are essential to your survival. But for those products that are consumed within South Africa, a number of companies will collapse because they do not have the sort of market. But the picture will emerge better after next year's World Cup and I think we will see a much truer picture of what is going on in South African"

And AfDB senior economist for Zambia Ashie Mukungu said South Africa's economy had gone into recession because it had highly developed financial markets which were highly integrated with the developed world, resulting in feeling first round effects of the global economic crisis.

"The banking sector was shaken and even the commodity sector. That is how South Africa came into a recession but you might want to know that from the time Mr (Thabo) Mbeki (former South Africa president) stepped down and with the retaining of Mr Trevor Manuel as finance minister, there was policy consistency," said Mukungu.

"There was no policy reversal and because of that policy consistency, the so-called recession was just an admission on the side of (South African) government that 'we may not be able to provide the services we had envisaged in the medium term.' But everything possible had been done to try to bring back the economy in course," said Makungu.

Labels: AfDB, ASHIE MUKUNGU, GREAT DEPRESSION II, NEOLIBERALISM, ROBERT SICHINGA

posted by MrK @ 7:51 PM