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SA may not be in recession – economist

Source: Fin24.

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Economist Roelof Botha says SA may not be in a recession, as has been widely reported in the press.

According to most analysts, SA has entered a technical recession based on two successive quarters of negative GDP growth.

Speaking at the Momentum Consult annual conference earlier this month, Botha said there is more than one way to define a recession.

If one uses the OECD (Organisation for Economic Cooperation and Development) definition, GDP should be compared on a year-on-year basis rather than on a quarterly basis. Thus when comparing the second quarter of 2018 to the same quarter in 2017 using this definition, it becomes clear that SA is not in a recession.

Botha also addressed issues of land reform and radical land reform in his address.  He is busy with an international study on what happens in a country when land is nationalised. According to News24, Botha has identified a number of likely consequences if the SA Constitution is amended in order to establish radical land reform. These include the likely diminishing of the protection of property rights, heightened policy uncertainty, a decline in the prices of land and related assets, a negative impact on banks and their ability to provide loans, and rand weakness.

Other consequences include disinvestment in agriculture and food processing industries, a threat to food security, a substantial rise in litigation costs, a negative impact on GDP and fiscal revenue, growing unemployment and eventually heightened potential for socio-political unrest.

 

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