Nhlanhla Nene talks down fears of recession

2014-06-01 15:01

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The new minister of finance, Nhlanhla Nene, says analysts’ sentiments that South Africa is heading towards a recession are “very negative predictions”.

Nene said the decline in GDP by 0.6% was a result of the mining strike, but other sectors of the economy have actually performed well.

The mining and quarrying industry contributed -1.3 percentage points to the overall decline in GDP, according to Stats SA.

“What happened is the 24.7% [decline in output] in the mining sector translated into a?...?decline in the GDP and this eroded the growth made in other sectors. My view is we are at the bottom of the curve, but we are not headed into a recession,” said Nene.

“Since 2009, our planning has always been for a difficult situation. When the previous administration came in, it was just on the onset of the global economic crisis.

“I don’t think the situation is very different. But our economic stabilisers are in place with regards to our fiscal stance and at the same time it gives us reason to re-evaluate our planning processes and come the medium-term budget statement, we will give the nation our direct policy response,” he said.

Nene, who previously served as the deputy finance minister, said he was not overwhelmed by his new position because “we have the medium-term budget policy statement, which has been running for three years and it gives us a sense of where we are going”.

According to him, over the next five years, emphasis will be placed on introducing infrastructure and creating an environment that improves business and investor confidence.

“The implementation of the renewable energy programme has already started and we are working with business. They have already bought into this. We have allocated resources to these based on the National Development Plan [NDP] and we are on track.”

He said he will continue to reduce government salaries in a bid to cut down debt, but he didn’t want to commit to any new tax reforms. “We have a tax committee that is going to be giving us the tax review report. We will take an approach informed by the report.”

National Treasury has committed to the NDP along with the rest of government.

“We have commitment from the top. The deputy president [Cyril Ramaphosa], who is the vice-chairperson of the National Planning Commission, has committed to the NDP and we are ready to run with the implementation,” said Nene.

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