Gordhan: SA can avoid a recession
The Finance Minister says it is possible through better cooperation between the state & private sector.
JOHANNESBURG - Finance Minister Pravin Gordhan says while there's serious concern about important sectors of production in South Africa, the country can avoid a recession through better cooperation between the state and private sector.
Gordhan says the World Bank estimates South Africa's economy will grow by between 1,2 and 1,6 percent. He says the country's estimates will be announced in Parliament when the budget is tabled.
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The finance minister adds 70 percent of the economy is controlled by private companies.
"What's the solution to raising the growth from 1 percent, to 1,4 percent to 4 percent? It's not only government's responsibility. 70 to 80 percent of our economy is in private hands. So how do we incentivise the private sector to invest? How do we create confidence in the country?"
He has dismissed suggestions that South Africa is heading towards a recession, he says the economy is simply not growing fast enough.
"So we're growing as an economy and we're not going into a recession, but we are not growing fast enough. We're also not growing inclusively enough. We are not solving the problems of inequality, unemployment and poverty in our country adequately."
Yesterday, the minister spoke at a briefing in Pretoria on the outcomes of a special Cabinet meeting, which discussed the economy and budget-related matters.
At the briefing, he said government was working close with business and labour.
"How do we focus our minds, resources and our creativity in order to increase one point whatever it is to the 4,5 percent that that we actually require in South Africa?"
Gordhan said Cabinet approved strong measures to restore a sustainable fiscal path.
RAND HITS RECORD LOWS
The rand dropped to an all-time low against the dollar on Sunday night reaching R17,99 cents after erratic trading on Asian markets.
It recovered the next morning and is now sitting at around R16,60 cents to the dollar.
Experts believe it will take some time for the rand to recover and say consumers will be hard hit this year.
Furthermore, South Africans have been warned that the Reserve Bank may have to increase interest rates at the end of this month.
Statistics South Africa says manufacturing output in November was down by one percent year-on-year in volume terms, lending more weight to claims the country could be headed for a recession.
The agency says this one percent fall comes after manufacturing output contracted by 2.1 percent in October.
On a month on month basis, factory production was down 1.2 percent, but was up 0.9 percent in the three months to November compared with the previous three months.
The figures follow the rapid decline in the value of the rand.