EDITORIAL: GDP figures shock calls for faster pace of reforms

When the economy turns out to have been shrinking while economists expected it to be growing it’s always going to be a shock.

But it’s even more so when everyone was hoping to see signs that the growth rate was starting to lift as a result of the end of load-shedding, the new spirit of confidence prompted by the government of national unity and the start of lower interest rates.

On the plus side, the 0.3% decline during the fourth quarter was driven mainly by a sector — agriculture — which is small in the scheme of things but always volatile.

It doesn’t necessarily change the narrative that growth is starting to pick up, and that the pointers for the next couple of years are looking good.

Strip out agriculture and, as Stats SA has said, the latest GDP figures are roughly in line with consensus, at plus 0.4% for the third quarter and 0.9% year on year.

But even without agriculture, the figures show the economy still flatlining for the most part. The clear message is that the GNU needs to step on it and accelerate the pace of reforms.

The other message is that we need a hard look at the agriculture numbers coming out of the department of agriculture, land reform & rural development.

We knew drought impacted the maize crop but nobody expected a 29% crash in the sector — if it was indeed 29%.

Stats SA has had to revise before to correct the department’s erroneous numbers. The same may happen again in the next quarter.

The end result may surprise on the upside but, meanwhile, the damage to confidence is done.