JOBS ON THE LINE AS RECESSION HITS
RECESSION has taken hold in South Africa with worse to come at least until July and little chance of any overall growth this year.
Treasury director general Lesetja Kganyago said more jobs would be on the line before the downward spiral stops and the economy starts to recover sometime later this year.
"The storm was more ferocious than we had initially thought," he said.
Statistics South Africa confirmed yesterday what most South Africans already knew:
The economy is shrinking and, with two consecutive quarters of confirmed contraction, now meets the formal definition of a recession. But the actual figure was nearly twice as bad as the consensus forecasts of major news agencies.
StatsSA said the economy contracted by 6,4percent during the first three months of the year. It is the first recession in 17 years and the worst quarterly growth statistic recorded in 25 years.
Mining output fell by nearly a third, which was the highest figure on record; manufacturing, which accounts for 15percent of national output, was down 22,1percent; and the retail sector contracted for the fourth quarter in a row.
The seasonally adjusted and annualised quarterly contributions of major industries were down to levels of two, three and four years ago.
Standing in for new Finance Minister Pravin Gordhan, who had been billed to speak, but was tied up in the Cabinet breakaway, Kganyago declined to revise the government's official 1,2percent gross domestic product growth forecast for 2009, but said more jobs would be shed and more people would slide back into poverty before the economy turned positive.
"The (only) certainty I can give you is that come the Medium Term Budget Policy statement in October, we will revise the (growth) forecast downwards and if we do record zero percent growth we would be doing very well," Kganyago said.
He said it was possible for an economy to grow without creating jobs, but it was not possible for an economy to create jobs without growing.
"Jobs have been shed in the first quarter and if we expect another quarter or contraction, you need to expect that more jobs will be shed," he said.
Kganyago conceded that economists were divided on whether the improvement would kick in this year or next, but said: "Yes, we expect that the South African economy should turn in the second half of this year."