BHEKI NTSHALINTSHALI: Ramaphosa has reopened a stagnant and bleeding economy
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The further reopening of the economy by President Cyril Ramaphosa has created positivity and optimism for many South Africans, who are desperate for good news. The announcement represents an improvement because tax relief and other announced economic measures were proving useless in the face of the lockdown, with companies not being allowed to open their operations and workers surviving on stipends.
It is easiest, in the short term, to retreat inward, to celebrate imaginary progress and wallow in sentimentality and false optimism. But we need to abandon collective self-delusion and reflect honestly on the state of our economy, because we are in the terminal stage. Long before Covid-19 the sixth democratic dispensation inherited a stagnant economy accompanied by worsening unemployment, inequalities and poverty, manifesting at the macroeconomic level in rising public debt, a bigger budget deficit, higher debt service costs and revenue shortfalls. GDP had been declining since the middle of 2019.
These subdued levels of growth are part of the serial stagnation that set in after the global capitalist crisis that erupted in 2007/2008. This has been accompanied by high corporate and public debt, which has now reached proportions worse than the pre-crisis period. That is why three months after the launch of the R200bn loan guarantee scheme only R13.26bn has been committed to businesses. About 37% of applying businesses have been rejected because they do not meet the banks' excessively strict lending criteria.
In 2020 SA found itself bogged down under the weight of a rising debt burden and neoliberal policies, amid intermittent threats by the Western sovereign ratings agencies to downgrade its investment grade to “junk status”. The agencies, which the finance minister and Treasury had worked hard to impress, subsequently downgraded SA in the middle of the pandemic.
The Quarterly Labour Force Survey for the fourth quarter of 2019 indicated that it is “the first time since 2008 that the unemployment rate has not decreased in the fourth quarter”. Stats SA also revealed that “retail trade sales decreased by 0.4% year on year in December 2019”. This was the economy we locked down in response to the Covid outbreak. Now the lack of solid intervention by the government amid depressed private capital investment means we are not only likely to reproduce this serial stagnation, characterised by episodes of technical recession and rising unemployment, but we’re facing a possible economic depression.
There has been no progress in ...
It is easiest, in the short term, to retreat inward, to celebrate imaginary progress and wallow in sentimentality and false optimism. But we need to abandon collective self-delusion and reflect honestly on the state of our economy, because we are in the terminal stage. Long before Covid-19 the sixth democratic dispensation inherited a stagnant economy accompanied by worsening unemployment, inequalities and poverty, manifesting at the macroeconomic level in rising public debt, a bigger budget deficit, higher debt service costs and revenue shortfalls. GDP had been declining since the middle of 2019.
These subdued levels of growth are part of the serial stagnation that set in after the global capitalist crisis that erupted in 2007/2008. This has been accompanied by high corporate and public debt, which has now reached proportions worse than the pre-crisis period. That is why three months after the launch of the R200bn loan guarantee scheme only R13.26bn has been committed to businesses. About 37% of applying businesses have been rejected because they do not meet the banks' excessively strict lending criteria.
In 2020 SA found itself bogged down under the weight of a rising debt burden and neoliberal policies, amid intermittent threats by the Western sovereign ratings agencies to downgrade its investment grade to “junk status”. The agencies, which the finance minister and Treasury had worked hard to impress, subsequently downgraded SA in the middle of the pandemic.
The Quarterly Labour Force Survey for the fourth quarter of 2019 indicated that it is “the first time since 2008 that the unemployment rate has not decreased in the fourth quarter”. Stats SA also revealed that “retail trade sales decreased by 0.4% year on year in December 2019”. This was the economy we locked down in response to the Covid outbreak. Now the lack of solid intervention by the government amid depressed private capital investment means we are not only likely to reproduce this serial stagnation, characterised by episodes of technical recession and rising unemployment, but we’re facing a possible economic depression.
There has been no progress in ...
