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Parliament, Friday, 14 July 2017 – The recently released manufacturing statistics call for a sober analysis and reflection on the sector rather than reckless pronouncements, said Parliament’s Trade and Industry Portfolio Committee Chairperson, Ms Joanmariae Fubbs.

She said the analysis of the production and sales data suggests that the sector is facing a challenging economic environment which is not unexpected, as manufacturing is an integral part of the economy and acts as a barometer.

On several occasions the Minister has pointed out to the Portfolio Committee on Trade and Industry that the manufacturing sector is inextricably linked to mining, agriculture, telecommunications, and other trade sectors. Indeed manufacturing responds not only to the immediate growth performance of these sectors of the economy, but also to the investment trajectories and growth prospects of these sectors.

In my opinion, therefore, “it is disingenuous to suggest that a only a few months of growth in, for example, the mining or agriculture processing sectors will immediately translate into rising investment in those sectors which could in turn lead to rising demand for manufactured goods”, said Ms Fubbs.

She added that it was also pertinent to point out that several reputable analysts, including the Bureau for Economic Research at Stellenbosch University, noted that the negative growth of GDP in Q1 was unexpected. “Economics requires both a scientific and social understanding of the facts,” said Ms Fubbs.

Ms Fubbs said that there are a number of factors that have resulted in this negative growth, including a weakening in consumer and business confidence, uncertainty surrounding the ratings agencies’ decisions, and the uncertain outlook for the agricultural and mining sectors.

“A significant factor to be borne in mind is that the trade sector declined sharply in Q1 and this, I believe, provided the primary impetus for the South African economy to shift down into a recession,” said Ms Fubbs.

What would be constructive is a careful analysis of the latest manufacturing production and sales data to accurately diagnose the weakening outlook for this sector. Ms Fubbs said this would reveal that not all parts of the manufacturing sector are in a recession.

“Indeed, there are some notable exceptions with textiles, clothing, wood products, some parts of metal products, machinery and furniture growing quite significantly. On the other hand, a number of sectors have experienced substantial declines and these include electrical machinery, petroleum products and nuclear fuel,” emphasised Ms Fubbs.

She added that the weaker performance of the electrical machinery sector was cause for concern but that further research and analysis is required to effectively diagnose the challenges facing this sector.

The Chairperson reiterated that the DTI continues to provide support to the manufacturing sector through the launch of the targeted Agro-processing Support Scheme, 12i Tax Allowance, the Clothing and Textile Support Programme and the Black Industrialist Programme.

“We need to acknowledge that as business and consumer confidence decline across all sectors, government, Parliament and all interested and patriotic South Africans will need to consider how the strengthening or reconfiguration of the incentives available to business are determined,” said Ms Fubbs.

She added that all South Africans should consider what other measures can lift confidence in the future of the economy, its growth with employment so that our prospects may reflect reality. 

ISSUED BY PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY, MS JOANMARIAE FUBBS

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