SA’s economy still in slo-mo
The economy would recover and avoid a recession, but would continue growing more slowly than many countries in Africa, Finance Minister Pravin Gordhan said this week.
“We believe that we are in the process of recovering as an economy, but the key question is how do all of us work together so that recovery is stronger? Stronger is not just over 1% or maybe 2% ... in order that we leave the South African economy and the 55 million South Africans in a better position,” said Gordhan addressing delegates in Cape Town at the national congress of the National Union of Metalworkers of SA (Numsa).
Numsa is South Africa’s largest trade union, with 340 000 members.
Countries that were highly reliant on foreign savings, including South Africa, would remain vulnerable to global volatility, Gordhan said.
Brexit and the election of Donald Trump as US president “introduces uncertainty and instability for our country”.
“If after January 20 next year he decides to cancel some of the trade agreements that his predecessors have entered into, it will be bad for us, in our situation.
“Brexit already spells uncertainty for the next two to maybe four years because many of our trade agreements with Europe as a whole, including the UK, need to be renegotiated,” he said.
Numsa general secretary Irvin Jim said that his union’s congress was taking place at a time when the country was confronted with mass poverty, mass unemployment and inequality.
“We are witnessing that you [Gordhan] are under pressure from ratings agencies. They are not taking responsibility for their ill-advised policies that have made us number one in the world in terms of inequality.
“They are just threatening you that you must do further belt tightening and that no exponential spending should take place.”
Jim said that these threats would ultimately protect white wealth, while the working class would continue to languish in poverty, unemployment and inequality.
Economic Development Minister Ebrahim Patel said the metal sector faced the biggest challenge in living memory, with the crisis of overproduction and a global glut of steel.
“Production from the steel and engineering sectors is under pressure from reduced domestic demand and growing levels of imports in the South African economy.
But not all of the sectors that Numsa organises have been faced with the same problems. The automotive sector has grown over the past few years in its production capacity in its investments and in exports.”
He said government had introduced a new incentive scheme worth billions of rands to try to keep and expand motor vehicle production in South Africa to make the country the centre of Africa’s car manufacturing sector, thereby creating jobs.
“Last year we sold about R88 billion worth of metal products to the rest of the African continent – that’s an enormous amount of production,” he said.