Gordhan: Economy to bottom out late-2009
South Africa’s economy will experience some months of tough times and will bottom out by late 2009, said Finance Minister Pravin Gordhan on Thursday.
“We will bottom out later in the year and begin to see the green shoots that everybody is talking about become little shrubs,” he told eTV news in an interview.
“Although we are going to go through a tough period, like all things in life, this will end.”
Gordhan said South Africa was not as worse-off as other countries but would not comment about the likelihood of a recession, adding the Treasury would give its views on the economy in a few months.
“We are going through tough times and we will go through them for some months to come ... So while we do have some contraction in our economy many more countries have a worse contraction.”
Statistics South Africa will release GDP figures for the first quarter on May 26, which are largely expected to show the economy slid into its first recession since 1992.
The biggest economy on the continent contracted by 1,8% in the fourth quarter and weak retail sales numbers and poor manufacturing and mining output data have pointed to another quarter of negative numbers.
Gordhan reiterated that inflation targeting and other economic policies that have worked would not change, but would be discussed.
“All we are saying is there is no change in economic policy.”
“What we are saying is: we need to gather the voices of South Africa, we need to engage and debate in discussions and arrive at an understanding about why certain policies that have worked are necessary.”
Trade union and communist allies of the African National Congress have pushed for a relaxation or abandonment of inflation targeting, which they blame for fairly tight monetary policy and they said it has hurt the poor.
Gordhan is part of the three ministries in the new Jacob Zuma administration that will steer the economy, including the planning commission under Trevor Manuel and the economic development ministry headed by Ebrahim Patel. He said the three departments would work together. - Reuters