Depth report

　　

South African President Cyril Ramaphosa recently announced a series of economic stimulus plans to boost South Africa's weak economy, in which infrastructure will be the focus of government investment.

 　 Ramaphosa said that the economic stimulus plan involves agriculture, tourism, manufacturing, medical and other fields, with a scale of 50 billion rand (about 3.5 billion US dollars). The specific details of the stimulus plan will be announced in the mid-term budget report to be released in October. He said that the plan aims to promote economic activity, restore investor confidence, create jobs, and improve the living standards of disadvantaged groups.

 　 The South African Bureau of Statistics recently released data showing that South Africa's economy in the second quarter had a negative growth of 0.7% from the previous month, which was not as good as previous market expectations. Coupled with the adjusted negative growth of 2.6% in the first quarter, South Africa's economy recorded negative growth for two consecutive quarters. Earlier, many economists generally predicted that South Africa's economy should perform well, so the second quarter economic data surprised the market.

 　 Analytical data shows that in the second quarter, agricultural output fell by 29.2%, transportation fell by 4.9%, and trade fell by 1.9%. At the same time, mining output and financial industry rose by 4.9% and 1.9% respectively. Among them, the main reason for the sharp decline in agriculture was the impact of extreme weather in the early period, including a century-old drought in the Western Cape Province, the main agricultural production area, and hailstorms in Mpumalanga Province, which caused heavy damage to crops. In terms of industries, South Africa’s primary industry dropped by 4.6%, mainly due to the decline in the agricultural industry; the secondary industry grew by 0.5%, and the manufacturing industry shrank by 0.3%, but the construction industry grew by 2.3%, and electricity, gas and water grew by 2.1%. Positive contribution; the tertiary industry shrank by 0.6%.

 Hilary Chowphy, the guest editor of South Africa’s Business Daily, pointed out that the analysis data that the market relies on when assessing the economy is mainly concentrated in areas that are regularly updated on a monthly basis, such as manufacturing, mining, retail, etc. These related industries only account for 40% of GDP, and agriculture that has had a major impact on GDP data in the past three years is not within the scope of monitoring. Since the beginning of this year, the land reform in South Africa has affected the expectations of farmers, causing them to dare not increase investment in agricultural production activities, which is an important reason for the decline in agricultural output. Hilary Chowphy pointed out that foreign trade provides 20% of the country’s jobs, and the agricultural population accounts for 5.2% of the employed population. The shrinking of the above two industries will put new pressure on the already unoptimistic employment situation.

 　 However, the South African government is confident in getting out of the economic difficulties. Ramaphosa recently said in a discussion with local professionals in various fields that he should not panic about the economic prospects of South Africa. Ramaphosa said that South Africa has overcome economic difficulties many times, and this time is no exception, and it will surely be able to tide over the economic difficulties. The South African Finance Minister said on another occasion that the upcoming South Africa Investment Summit and Employment Conference, the mid-term budget report that the Ministry of Finance is about to submit to Parliament for deliberation, and a series of economic reform plans will all have a positive effect on the economy.

 　 Some people in the business community also expressed cautious optimism. Alna Mulman, head of economic analysis in the Financial Markets Department of Standard Bank of South Africa, predicts that South Africa will achieve a 0.9% growth in 2018, and the growth rate will reach 1.8% in 2019.