It appeared that he had been ”rather too confident” about economic recovery this time last year, Planning Minister Trevor Manuel said on Thursday.
He was speaking in Cape Town two days after Finance Minister Pravin Gordhan told Parliament South Africa was in recession for the first time since 1994.
Manuel, addressing the annual Standard Bank Africa Forum in Cape Town, said that in his last medium term budget policy statement, in October last year, he had declared that ”the thunder will pass”.
He had also said South Africa’s investment plans were in place and its course firmly directed at long-term growth and development challenges.
”Looking back, it appears that we were rather too confident,” he said on Thursday.
”But then, we were watching the impact on the financial sector very, very closely.
”Such action was probably not altogether unreasonable: it was the financial sector that was staring into the abyss in the developed world.”
In the past 12 months, much had been learned about the extent of the interconnectedness of the global economy, and about the speed of effects of regulatory failure in the United States.
”But perhaps more importantly, we were all struck by the extent of the asymmetry of the impact,” he said.
In all emerging market economies, the financial sector had held up remarkably well.
In the south, it was however the productive sector that took the biggest knock as the markets for exports collapsed as a consequence of the seizing-up of financial markets.
”These features will be in evidence for some time, yet, and it is fundamentally important that we take time to understand these trends in globalisation,” he said.
Manuel also said that without ”bringing Africa back more strongly”, efforts to rebuild the global economy would be weakened.
Without regional integration within the continent, countries would again be ”picked off”. — Sapa