Cyril bullish on recession turnaround

President seeks to reassure on SA’s chances of improved third quarter during China visit

President Cyril Ramaphosa visits the headquarters of the Alibaba Group with the company’s co-founder and executive chairman Jack Ma, in Hangzhou, China, on Wednesday
President Cyril Ramaphosa visits the headquarters of the Alibaba Group with the company’s co-founder and executive chairman Jack Ma, in Hangzhou, China, on Wednesday
Image: Reuters

President Cyril Ramaphosa is confident his economic plans will pull the country out of its first recession in nine years.

Speaking to journalists from the Chinese city of Hangzhou‚ where he visited e-commerce billionaire Jack Ma as he concluded his five-day visit to China‚ Ramaphosa said he was confident an economic-stimulus package he planned to announce soon would lift the mood and investment prospects in the country.

SA would soon recover from recession, he said in his first reaction to news that undermines his efforts to revive the economy and attract investment.

Ramaphosa‚ who has been in China since Saturday‚ began his visit with a meeting with Chinese President Xi Jinping on Sunday‚ where the two discussed trade relations.

The meeting was followed by the Forum on China-Africa Co-operation, co-chaired by Ramaphosa and Xi.

But news on Tuesday that the SA economy had slipped into a technical recession put a damper on Ramaphosa’s investment drive in China.

However‚ he said he was confident the economic picture would look different in the next quarter of the year.

“It’s disappointing that our GDP has shown a negative growth trend, but I don’t think we should be disheartened because it was largely driven by agriculture,” he said.

“We had late rains‚ late harvest, and I am sure agriculture will show growth in the next quarter‚ so all is not lost.

“I don’t believe a full recession will take hold in South Africa.

“Government is going to be responding to the challenges that we’re facing.

“We’re finalising a stimulus package to inject impetus and growth into our economy.”

Ramaphosa said he was confident the announcement would lift the mood in the country‚ as well as investment prospects and GDP growth.

His visit to China‚ he said‚ had boosted his drive to get local and international businesses to invest at least R1.3-trillion in the SA economy in the next five years.

He said relations between Beijing and Pretoria had entered a golden era following frank discussions on what needed to be done to resolve the trade imbalance between the two countries.

China is SA’s largest trading partner‚ with bilateral trading amounting to $39.17bn (R603bn) last year‚ but largely in favour of the Chinese.

The president said the Chinese had agreed to start importing finished products from SA and not just raw materials that they sold back to the country after processing them.

Ramaphosa also acknowledged that some Chinese businessmen had expressed concerns about their security in SA.

“This has been raised with us over and over – we want to focus more sharply on the issue of security because it’s one of the constraints that impede the flow of investments into our economy.

“We’re going to be addressing it directly through our cluster on security.”

Ramaphosa said Chinese dollar billionaire Ma‚ who owns e-commerce giant Alibaba‚ had agreed to attend an investment conference in October. He was also lobbying Ma to support SA SMMEs in the IT and e-commerce space.

Meanwhile, ratings agency Moody’s said the slide into recession would exacerbate fiscal and monetary challenges.

It said weaker-than-expected economic data was “credit negative”.

The agency is the last of the big three international agencies to rate SA’s long-term foreigncurrency debt investment grade. - Additional reporting by Reuters