Gigaba: Economic transformation to push forward, despite bleak economy

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Cape Town – It would be a mistake to react to the recession by focusing only on the growth of established business and letting economic transformation fall by the wayside, said Finance Minister Malusi Gigaba on Thursday.

Addressing the media to chart the way forward following South Africa’s entrance of a recession, Gigaba said during the meetings government had with particularly black business people, it was stressed that inclusive growth and economic transformation should be advanced, despite the bleak economy South Africa finds itself in.

“Economic transformation must not be an after-thought,” Gigaba said. “The National Development Plan (NDP) says we need both. You cannot do one, without the other. They are mutually reinforcing.”

Gigaba said President Jacob Zuma called an urgent meeting last night with Cabinet ministers in the economic cluster where urgent interventions in the economy were discussed. “The President has stressed the urgency of a coordinated response and will convene a full day meeting in two weeks to address the obstacles delaying finalisation of policies.”

According to Gigaba, South Africa is at an inflection point. “We can choose to be negative and pessimistic, or positive and optimistic. As National Treasury we believe the glass is half full, not half empty.”

He stressed that government remains committed to maintaining the fiscal framework and this assurance should also be noted by ratings agencies which remain concerned about this.

On June 6, South Africa entered a recession after GDP contracted for a second consecutive quarter.

The economy found itself in negative territory when GDP was recorded at -0.7% in the first quarter of 2017 following on a 0.3% contraction in the last quarter of 2016.

It is the first recession since 2009. Since 1961, the country has been in recession eight times. A recession is defined as two consecutive quarters of negative economic growth.

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