Low interest rates may not encourage the right investment in the economy, says Finance Minister Pravin Gordhan.
“There is a view among some economists that low interest rates … are incentivising the wrong kind of investment in the economy,” he told an South African Chamber of Commerce and Industry dinner in Johannesburg on Monday evening.
Low interest rates appeared to encourage investment in technology and capital intensive areas, rather than labour absorptive activities, he said.
The South African Reserve Bank has since November last year kept interest rates at their lowest level in over 30 years.
This could be counterproductive to South Africa’s goals of growing the economy to create more jobs, he said. — Sapa