South African Finance Minister Trevor Manuel has painted a positive picture of the South African economy amid growing imbalances in many developed economies, saying he is confident the inflation target will be met and the underlying economic trends remained quite robust.
Speaking at South Africa’s first Islamic finance and investment conference in Cape Town on Monday, Manuel said that in respect of price stability, the government was “exceedingly confident” that the inflation target will be met “because it is so crucial a plank in economic policy”.
“Whilst we are not yet at levels that would satisfy sufficient labour absorption, the underlying economic trends remain quite robust. Total real investment grew 8% in the first half of 2003 and similarly, strong positive trends are evident in respect of other variables as GDE expanded by 4,5% in the first half of 2003.”
Manuel also noted that South Africa’s current account deficit was currently “modest enough to be easily serviced”.
With a budget deficit of only 1,1% of GDP and a debt-to-GDP ratio of 37,9%, many of the country’s macroeconomic criteria would easily beat the Maastricht criteria if the country were in Europe, the minister noted.
However, Manuel said that huge challenges remained for the country, with growth constraints arising from deficits in key areas such as skills and savings.
Both of these were “exceedingly important areas of work in progress”.
Finally, regarding the black economic empowerment charter being drawn up by the financial services industry, Manuel said that private sector participants had recently invited the government to join their discussions in formulating the charter.
He said details of the charter were expected to be made public by the end of September, with details of issues such as financing of empowerment deals expected to be left to be worked out later. ‒- I-Net Bridge