The Eurozone
Johannesburg – South Africa’s economy is improving but is vulnerable to problems in the Eurozone, says Finance Minister Pravin Gordhan.
“Economic growth is reasonably stable,” Gordhan said at the Foreign Correspondents Association breakfast meeting in Johannesburg on Monday.
“Like many other parts of the world, the economy is still subject to the vagaries of the global economy, in particular the European situation. From our point of view, we look forward to a far more clear set of actions coming from European countries that will give markets the certainty they require.”
Uncertainty, he said, damaged growth as well as employment prospects.
The minister’s comments come ahead of the G20 meeting convening on Thursday and Friday, which is expected to address the European crisis where leaders will find out if they are any closer to a definitive answer on the matter.
It is also expected to look into whether the International Monetary Fund (IMF) has adequate resources and if it requires additional funds.
Globally, the world is moving towards multi-polarity where traditional methods of growth are not operational. “We are living in epoch-changing shifts in the economy, they don’t happen overnight nor can they be judged over a short period. These are shifts that are reflected in the way in which global growth is being distributed,” said Gordhan.
“We are now in a multi-polar world of transition. Multi-polarity is where we are heading. It shouldn’t be seen as this enforced historical change that we have to live with but rather as a vital necessity to ensure that global growth is restored .”
On the decision by rating agencies to place South Africa on a negative watch, Gordhan said comments made by the agencies were “unfortunate”.
“Some of the concerns by agencies seem to be an unfortunate casting of European shadows on the South African scene and there is nothing to suggest in the numbers or policy pronouncement that this government has made to justify the kind of doubts that rating agencies are placing on South Africa.”
There were, however, social demands to better deliver resources. Gordhan said this was not driven by demands for more money to be spent but rather for money to be better spent and less subject to corruption, a matter which government was attending to.
“We want to build up a 10-year fiscal framework, which will tell us what we can afford and how we need to grow the economy to overcome challenges,” said the minister.
South Africa is working to improve growth with its infrastructure programme that was recently announced, as well as with the competitive programme for the industrial sector, support for emerging farmers, investment in science and technology as well as employment expansion – particularly for the youth, for whom processes in this regard [for youth employment] were “taking too long”.
“There are immense opportunities on the continent,” said Gordhan.
On the issue of reducing unemployment, Gordhan said this ambition depended on the extent of economic growth, labour absorption as well as greater investment in industries that have a larger capability to employ people, among others.
“I admit [we are] not easily going to meet some of the targets we set but I’m hopeful that some of the programmes we put in place might begin to change the picture. If we can get the global economy to settle down and get back to a growth path, we might see a different picture in about five years.”
South Africa aims to create five million jobs by 2020. Gordhan said more needed to be done, adding that 70 percent of the job creation target must come from the private sector.
The minister stressed that incentives for business to create jobs were available, and that far more “urgent discussion” was needed in this regard. – BuaNews
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