I like to think of myself as a polite woman. So shortly after the GDP figures for the first quarter of 2019 came out, I asked the person on the other side of the phone line if swearing was allowed between us. I don’t remember the exact response, such was the heat of the moment, but it was enough for me to proceed to express myself with the requisite rhetorical colour.
What recent growth figures showed, quite starkly, is the frailty of the productive base of our economy. A truckload of studies have made that point quite clear. Since the Great Recession, investment in South Africa has plummeted; as has the rate of productivity of labour and capital. Unemployment has remained persistently high. We have lost ground in our share of the global market while the complexity of our export basket has deteriorated.
But back to the apparent unmentionables. How industrial policy became a dirty word takes us back to the later third of the 20Century. Before then, countries in the now industrialised west consciously shaped market outcomes in support of their productive sectors, especially manufacturing. The East Asian miracle economies followed the same playbook. But as other developing countries sought to build their industry, their efforts faltered.
A decade of macroeconomic easing in South Africa, with a significantly depreciated exchange rate and a doubling of the public debt to GDP ratio – inadvertent stimulus you might call it – did nothing to halt the decline in the productive sectors, including manufacturing capability.
Haowa, another dream?