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South Africa’s economy avoids recession

Sameera Casmod | sameerac@radioislam.co.za
06 March 2024 | 12:15 p.m. SAST
1 minute read

Photo: Getty Images

A recent StatsSA statement shows an increase of 0,1% in South Africa’s economic growth from the third to the fourth quarter of 2023. This slight uptick, in line with expectations, was largely attributed to ESKOM’s improved power generation in the final quarter of last year.

Lumkile Mondi, a lecturer at Wits Business School, explains that a recession is a technical term used by economists and is characterised by consecutive quarters of negative growth in an economy.

Technical recessions, indicative of economic difficulty, have ripple effects on businesses, employees, and government revenue, as seen in South Africa.

“When there’s a technical recession, it means that basically our productivity or our output is declining, meaning that many of our firms are under a lot of stress, and therefore there is loss of revenue and profit for owners… For employees and even the South African Revenue Services (SARS), it means that the employees are going to lose their jobs because profits are not being made, therefore less tax to SARS,” Mondi explains.

The economic downturn is exacerbated by reduced spending power in the retail sector, which affects both suppliers and retailers as consumer demand dwindles. Technical recessions also result in a need for increased efforts to stimulate investment and create opportunities.

Mondi expresses cautious optimism for South Africa’s future economic growth, which is affected by the turbulent global environment. Mondi explains that international peace agreements will potentially improve South Africa’s political and economic environment through increased commodity prices and reduced interest rates.

Listen to the full interview on Sabaahul Muslim with Moulana Sulaimaan Ravat.

 

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