How to end SA’s recession

South Africa finds itself in a challenging economic position as the country officially slipped into a technical recession, with the GDP contracting by 1.4% in the fourth quarter of 2019. This news has sent shockwaves through the nation as experts analyze the root causes and potential solutions for the economic downturn. The discussion around South Africa's recession and the way forward was recently explored in a TV news interview on CNBC Africa, featuring economic experts Daniel Silke, a Political Economy Analyst, and Duma Gqubule, Director for the Centre for Economic Development and Transformation. The key theme that emerged from the conversation was the pressing need for coherent economic policies to attract both domestic and foreign investment. Both Silke and Gqubule highlighted the country's struggles in achieving growth rates above 1% or at levels surpassing population growth, which stands at 1.4%. This has led to a continuous decline in GDP per capita over the past five years, with forecasts indicating a further decrease in the coming years. Three key points were emphasized during the discussion: 1. Declining Investment and Economic Growth: Gqubule pointed out the consistent decline in investment over the past two years despite commitments made at investment summits. He highlighted the collapse in public sector investment as a significant factor contributing to the overall decline in total investment. The sectoral analysis revealed that seven out of ten sectors experienced a decline, signaling a broader economic downturn. 2. Political Pressure and Policy Coherence: Silke discussed the political implications of the recession, emphasizing the pressure on President Ramaphosa and the ANC. He noted that without coherent economic policies that inspire confidence in both domestic and foreign markets, sustained economic growth will be challenging to achieve. Silke stressed the importance of a holistic policy approach to stimulate the private sector and generate economic momentum. 3. Urgent Need for a Social Compact and Fiscal Stimulus: Both experts underscored the need for a genuine social compact that involves all stakeholders in contributing to economic recovery. Gqubule proposed a fiscal stimulus to inject resources into the economy, likening it to a 'blood transfusion' crucial for reviving a struggling economy. Silke echoed the call for creative funding mechanisms and a shift towards unleashing the private sector's potential in bolstering economic growth. A quote from the interview encapsulates the urgency and complexity of the situation: 'We need a social compact, a genuine social compact, not the ones that the President has been talking about. We can't expect every time there's a problem in the South African economy that the first person you go to is the labor, and nobody else must take a haircut.' The call for shared responsibility and collaborative efforts to address South Africa's economic challenges resonated throughout the conversation. As South Africa grapples with the realities of a technical recession and a continuous decline in GDP per capita, the path forward remains uncertain. The experts' insights shed light on the crucial steps needed to navigate this economic crisis, emphasizing the importance of policy coherence, private sector engagement, and a concerted effort towards revitalizing the economy. The upcoming national elections further underscore the significance of addressing economic woes to regain public trust and foster sustainable growth.