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The damage caused by state capture is "worse than originally suspected", Reserve Bank lead economist for regional policy David Fowkes has said, saying it had resulted in an environment of "major investment and no growth".
Speaking in Cape Town on Thursday evening during that city’s leg of the Reserve Bank’s monetary policy forum, Fowkes said it was a "puzzle" that economic growth in South Africa had not been higher.
According to latest figures from Statistics South Africa, the economy shrank by -3.2% quarter-on-quarter (seasonally adjusted and annualised) in the first quarter of 2019 – the biggest plunge since the 2008 global financial crisis, and the second highest drop seen in over two decades.
- READ: The GDP horror show
'Growth should be over 4%'
"One of the puzzles for us is over the post crisis period, investment hasn’t been particularly low. In fact, public investment has been rising," Fowkes said.
"With this labour pool and infrastructure investment, in a normally functioning economy, growth should be over 4% and there certainly hasn’t been growth," Fowkes said.
"This is the evidence of what state capture looks like," he said. "Where you have major investment and no growth.
"We suspect that the damage that has been caused by state capture is worse than originally suspected," he added.
