South Africa targets structural reform to revive lagging economy

South Africa’s government is putting the finishing touches to a package of structural reforms and stimulus to help revive an economy that slipped into recession in the second quarter.

Details of the measures will be presented to cabinet next week before being announced in the mid-term budget on October 24, Finance Minister Nhlanhla Nene said in an interview on Bloomberg TV on Wednesday. These will include a long-awaited announcement on the allocation of spectrum to mobile phone operators.

The contraction in the second quarter was unexpected and was due to a slump in farming output compared with the previous three months, Nene said.

“This was a normalisation after strong growth in agriculture in 2017,” he said. Growth in other areas of the economy, such as mining, is expected to continue.

The weaker rand, which fell to a two-year low against the dollar earlier on Wednesday, should help boost exports, the finance minister said, adding that the South African currency is free-trading and acts as as a “shock absorber” for the economy.

“The hope is that our exports will respond more robustly and we will weather the storm,” he said.