SA ‘one of 10 slowest-growing’ African economies

SA will be among the 10 slowestgrowing African economies this year, according to the African Economic Outlook report by the African Development Bank (ADB), which has now also revised SA’s economic growth forecast to 2.9% this year from an earlier estimate of 3.2%.

While Africa’s overall growth is expected to increase from 4.5% this year to 4.8% next year, according to the report, a raft of forecasts has downgraded SA’s growth estimates to about 2.6% this year. Last week, the Bureau for Economic Research revised the country’s growth down to 2.5% from 2.9%.

ADB chief economist and vicepresident Prof Mthuli Ncube said at a briefing in Sandton yesterday that youth unemployment was “the biggest challenge” to Africa’s growth, added to a short-term labour market and the eurozone crisis.

The ADB economic report cited export and commodity prices as well as export volume as external drivers of growth in the continent.

Prof Ncube said that internal drivers of growth in Africa included domestic consumer demand, micro economic policies, and growth sectors including mining, agriculture, construction and manufacturing.

Standard Bank CE Sim Tshabalala said that Africa’s economic development was not a cyclical response to commodity demand in the rest of the world.

“In Standard Bank’s view, this resilience is strong evidence that Africa’s economic development will become increasingly self-sustaining. ‘Bliss’ might be too strong a response, but a degree of satisfaction and continued confidence is surely appropriate.”

Prof Tshabalala said a shortage of aggregate labour demand and a lack of labour market information were some of the challenges in the labour market.

The rural and community development fund manager at the National Empowerment Fund, Malungisa Zwane, said on Monday that a major challenge in empow- ering entrepreneurs in SA, especially in agriculture, was the lack of access to information. “We know of international trends in food and agriculture but we need to inform local people in the agriculture sector of what is happening,” he said.

Sub-Saharan Africa’s growth was at 5.9%, excluding SA, with some East African economies recovering.

“The African middle class is growing slowly but surely,” Prof Ncube said. “We now easily have 300-million people sitting in what I call the middle of the pyramid, which sees anything between $3 and $20 a day in expenditure. The lower part of that middle also receives remittances from diaspora family members abroad. It is easily $50bn a year that is pumped into Africa through the African diaspora.”

In the countries expected to have the lowest continental growth rates, SA joined Swaziland at 0.8%, Sudan at 2.4% and Egypt at 1.8%.