/ 2 February 2009

Manuel: Global crisis threatens Africa

Protectionism and the retreat of investments as a result of the world economic crisis are a threat to Africa, Finance Minister Trevor Manuel has said.

Protectionism and the retreat of investments as a result of the global economic crisis are a threat to Africa, a newspaper quoted Finance Minister Trevor Manuel as saying on Monday.

Business Report said Manuel also expressed concern, in an interview, over the ”headlong rush into fiscal and monetary support” by major developed economies such as the United States, Britain and Germany.

Leading world economies have slashed interest rates and injected billions of dollars to bail out struggling financial institutions hit by a crisis which has left several countries grappling with recession.

”When interest rates are reduced to zero in the UK and into negative territory in the US and there is no incentive to save, how is the next wave of investment to be financed?” Manuel asked at the World Economic Forum in Davos.

The government says South Africa will be able to avoid a recession this year, but Treasury has forecast that economic growth will slow to 3% this year from an estimated 3,7% in 2008, compared with an average 5% over the previous four years. — Reuters