South Africa is headed for a recession this year, according to a statement from the South African Institute of Race Relations (IRR).

This projection is based on GDP data released by Statistics South Africa which shows year-on-year growth at 0% and quarter-on-quarter growth at -3.2%.

“Stock exchange indices and foreign sales of SA Inc are indicative of plummeting investor confidence,” the IRR said. “Bloomberg data shows that by May year-to-date, foreigners had sold off R44 billion of SA equities. In addition, bond flows reversed sharply in the month of May with a R3.6-billion outflow.”

Business confidence is down across major sectors and consumer confidence has slowed dramatically, with household final consumption decreasing by 0.8% in the first quarter.

IRR analysts said this weak growth performance is a result of hostile government policy.

“First and foremost is the issue of ruling party ideology that seeks to place the state at the centre of the economy, crowding out private investment, and introducing all manner of inefficiencies, costs, and unintended consequences,” the IRR said.

“It is an ideology that identifies investors and the private sector as a public enemy.”

The IRR added that the government’s race-based empowerment policy, weak performance of South African schools, and hostile labour market regulation have also played a role in the economic slowdown.

“President Cyril Ramaphosa’s new Cabinet appointments offer no apparent prospects for such a reverse in policy,” the IRR said.

“The likelihood is rather that the Cabinet announced last week will shepherd South Africa into a recession amidst significant job losses and declining standards of living.”