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15 Jul 2008 15:00
South Africa’s economic growth rate still trails that of most dynamic emerging economies, with unemployment a key challenge to the country’s development, the Organisation for Economic Cooperation and Development (OECD) said on Tuesday.
“The welcome acceleration of real GDP growth in the past few years has done little to improve South Africa’s ranking relative to other middle-income countries, as faster growth has been a worldwide phenomenon,” the OECD said in an economic assessment of the country.
“South Africa’s growth rate still trails behind those of the most dynamic emerging economies ... The failure to bring unemployment down decisively is probably the greatest source of popular discontent about the government’s economic policies,” it added.
This suggests in the near term, priority should be given to creating jobs for the millions of primarily low-skilled unemployed South Africans, said the report.
The report also said that South Africa’s high current account deficit, while not extreme by international standards, exposed the country to the risk of a financial crisis associated with a sudden stop of capital inflows.
The OECD said the economic performance since 1994 had been impressive given the legacy problems, but add that remaining problems—such as inequality—are “still huge”.
The OECD noted strong bi-directional links between economic and social problems, like the recent xenophobia.
“One challenge for the future will be to maintain the macroeconomic prudence which has fostered fiscal and external sustainability while dealing with these formidable problems,” says the OECD.
“This will also make it easier to tackle more boldly some of the legacies of apartheid which are still holding back progress for many black South Africans,” it added.
- I-Net Bridge, Reuters
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