The signs of a recession were ominous and likewise the Fitch ratings already pre-empted our unresponsive trade conditions coupled in: unresolved land issues, exchange rate losses, revenue outflows, expensive luxury goods for example car industry, etc. Some of the technical misplacements and deep cuts of a recession is the high salaries paid out and bonuses attached to non-performing state-owned enterprises, travel SNT, etc. The technical recession will affect a diverse sphere of sectors and needs to be redressed sooner than possible with drastic reformative action. This is a scenario that affects all people alike black and white, therefore if we had instituted the NEEEF Bill, it would have made the scenario even worse.
Recession is a new term to our economy as we witnessed healthy growth all along. The Gross Domestic Product (GDP) growth remained negative for two quarters in a row leading our economy into a technical recession. The previous negative growth was witnessed in 2012 (Q3) and 2013 (Q1). In 2013 we have witnessed a reduction in the agricultural sector as a result of the drought, both in livestock and crop production. We have also witnessed lower levels of uranium production and contribution to GDP.
GDP Growth skyrocketed in 2013 (Q3) and 2014 (Q4) with high growth in diamond mining, wholesale and retail trade, transport sector, financial sector and the aggregate tertiary sector. The growth in 2014 was championed by the construction boom and which grew by 48%. In 2015 a snowball effect from the overall reduced government spending combined with global trade volume reduced our GDP growth prospect, until the recession in 2016 (Q3).
The inflation rate doubled between 2015 and 2016 on average from 3% in 2015(Q2) to 6.7% in 2016 (Q2). Food prices have doubled and this will exert more pressure on livelihoods of people. This is a disturbing phenomenon and needs active involvement from all sectors before we experience higher rates of malnutrition and poverty. Food is a necessity and along with high rental prices it drives up domestic debt, keeping people poorer.
The agriculture sector is paramount for job creation and food production. The sectors overall growth has not stabilized since its strong position in 2014. The percentage growth of the sectors dwindled as low as -17.6% in 2015 and -11.8% in 2016 contrary its growth of 22% in 2014 (Q3). The sector slightly recovered in 2016 (Q3) by 1.6%.
As per the NSA bulleting cattle exports to Angola and South Africa declined by 59.2%, following the technical non-tariff barriers imposed by South Africa on the export of weaners. However, the intake to local abattoirs increased by 6.8% subsequently.
Fish processing and fishing declined in Q3 by -4% and this is an alert to the fishing industry to strategically maintain non-export stock volumes for local processing to safeguard employment. The total catch is stable and this only signifies that fish is exported without considering retention of the local volumes required for local value addition.
The construction sector has been worst hit by tumbling from 0.3% percentage growth in 2016 (Q1) to -19% in Q2 and a further -12% in Q3. The hopes of more than 50% SME’s are suppressed by the diminishing state of construction sector affected by spending undercuts and projects withdrawals by the government. Technically all direct and indirect growth that is tied to this sector will suffer as a result. This will have a downward spiral effect on income and macroeconomic stability. Construction remains a bottleneck of any economy and we need to address the sector needs to seek an amicable solution to avoid further pitfalls and shortfalls.
Mining and quarrying has reduced significantly from 5.7% in 2016 (Q1) to -13% in Q2 and -5.6% in Q3. This is a key sector and hope for mineral and commodity growth. The mining sector remains a strong employment intensive sector on which our economy relies on. Metal ores showed signs of improvement and growth while it permeates that local processing receives less attention.
The manufacturing sector has dropped from 5.6% in Q1 to -8.5% in Q2 and 5.3% in Q3 consecutively.
Surprisingly wholesale and retail trade is performing with flying colours signifying a change of 9.6% in Q2.
In conclusion, there is need for dialogue to resolve the economic problems and address each sector needs. We also need to build a diversified economy in manufacturing, service trade and exports. God bless