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.
South Africa is behind other developing countries
Recent Articles
Featured What are the benefits of living in a “Zoom Town”?
With many careers moving online, work-from-home employees have realised they can live in smaller suburbs or towns at a lower cost and enjoy the benefits of a slower lifestyle, while keeping their jobs.
You can’t cash cheques anymore in South Africa – we find out why
In November 2020, the South African Reserve Bank (SARB) announced that cheques would be discontinued from 1 January 2021. But what guided this decision? We have a look at what the pitfalls have been of using cheques, and the consequences of removing them from the payment system.
The perks of investing in student accommodation
With the constant influx of new students entering tertiary institutions, there’s usually a steady demand for student accommodation. As an investor who’s interested in the property market, should you consider student accommodation?
Are you financially secure enough to buy your first home?
When you buy your first home, you need to make sure you’re in a secure financial position so that you can stay afloat in spite of your increased financial responsibility. But are you aware of all the costs you’ll have to carry?
Deals
Rouge Day Spa Tuesday Special
Price: Available on request
When: Tuesdays
Where: Cape Town
Monte Vista Two Nights Special
Price: Available on request
When: Until 31 December 2021
Where: Montagu
Century City Hotel 4 Nights Special
Price: From R1100
When: Until 31 January 2021
Where: Cape Town