South Africa is behind other developing countries

This week Business Unity South Africa (Busa) expressed concern at the drop in  gross domestic product (GDP) following the release of StatsSA’s latest figures.


According to StatsSA there was a 0.9% increase in the GDP in the first quarter of 2013, which was lower than the 2.1% in the fourth quarter of 2012.


Raymond Parsons, special policy advisor at Busa, said it was not unexpected that the manufacturing and agricultural sectors showed the biggest drop in growth.


“There may be some economic recovery in the second half of the year but Busa has now revised its overall forecast for growth this year from 2.5 per cent to about 2.2 per cent.  Although still a positive growth rate under difficult circumstances, it is increasingly inadequate to support South Africa’s employment and development goals, implying the possibility of yet further job losses,” said Parsons.


Reasons behind the weakening economy
According to Parsons this weakening economic performance is driven by domestic circumstances.  He added that South Africa should focus on the factors over which it has control and prevent the  economy drifting into a 'low-growth trap' going forward.


“Uncertain, increasingly difficult labour relations contribute to declining domestic and overseas investor confidence.   South Africa's increasing vulnerability to shifts in sentiment is reflected in the weak rand, also now under pressure from the large balance of payments deficit.  All this could eventually influence SA’s global credit ratings and raise the cost of much needed finance,” said Parsons.


SA vs. other developing countries
Tim Harris (pictured), shadow finance minister of the Democratic Alliance (DA), said the GDP growth statistics means we are completely out-of-step with growth rates in developing economies like Thailand (5,4%), Indonesia (6%) and Chile (4,1%). He added that we are now in fact growing slower than several embattled first world economies like the United States (1, 8%) and Canada (1, 1%).


“The current economic performance of developing countries around the world shows that it is possible to achieve high growth rates today. African countries in particular are expected to achieve exceptionally high growth this year. According to the African Economic Outlook Report, Ghana will grow at 7.1%, Mozambique at 7.4% and Zambia at 7.3% in 2013. We are confident that, with the right policies and strong leadership, South Africa has the potential to achieve similar growth rates,” he said.