A negative correlation between government spending and overall investment began to appear around 2014 🔒
Over the past few months, as the economic devastation from the lockdown has put millions of South Africans deeper into poverty, the National Treasury has resorted to a vulgar neoliberalism — an irrational obsession with irrelevant structural reforms and unprecedented austerity in the midst of a once-in-a-century depression — that will result in a three-year decline in GDP. Unemployment could increase to more than 50%, according to the expanded definition.
To justify its suicidal economic policies, the Treasury has had to adopt extreme positions in recent presentations to parliament and the National Economic Development and Labour Council . In the two presentations, the Treasury said the fiscal multiplier, which measures the effect an increase in government spending will have on GDP, was zero or negative. In other words, higher government spending could result in a decrease in GDP. This is the opposite of what mainstream economic theory says.
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