SA’s econ­omy still in slo-mo

CityPress - - Business - PETER LUHANGA busi­ness@city­

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.

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