17 April 2012
South Africa’s economic growth is “reasonably stable” but still vulnerable to problems in the eurozone, and the country looks forward “to a far more clear set of actions” from European countries to give certainty to global markets, says Finance Minister Pravin Gordhan.
Gordhan was speaking at a Foreign Correspondents Association breakfast in Johannesburg on Monday, ahead of a G20 meeting on Thursday and Friday where leaders are expected to find out if they are any closer to an answer to the European crisis.
The meeting is also expected to look into whether the International Monetary Fund (IMF) has adequate resources and if it requires additional funds.
‘Multi-polarity is where we are heading’
Globally, the world is moving towards multi-polarity, where traditional methods of growth are no longer operational, Gordhan said.
“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.
“Multi-polarity is where we are heading,” Gordhan said. “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 .”
Ratings agencies’ comments ‘unwarranted’
Gordhan described the decision by some ratings agencies to place South Africa on a negative watch as “an unfortunate casting of European shadows on the South African scene.
“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,” the minister said.
South Africa was working to improve growth with its recently announced infrastructure programme, as well as with the competitive programme for the industrial sector, support for emerging farmers, investment in science and technology, and employment expansion – particularly for young people, for whom processes were “taking too long”.
“There are immense opportunities on the continent,” Gordhan said.
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 with a larger capability to employ people.
“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 had to 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.