South Africa’s finance minister said on Tuesday the country would feel the effects of Greece’s fiscal crisis and warned that spillover from Europe could jeopardise a nascent recovery.
“We will no doubt feel some of the effects of the uncertainty in financial markets and possible downturn in trade again over the period ahead,” said Pravin Gordhan in a speech to Parliament on Tuesday.
“There is widespread concern that the fiscal debt problems of [the Organisation for Economic Cooperation and Development] countries will spill over into another financial crisis and a second wave of trade and employment cutbacks.”
South Africa is slowly recovering from its first post-apartheid recession.
The economy contracted by 1,8% in 2009, but came out of recession in the last quarter of the year, posting 3,2% growth.
But unemployment rose 0,9 points to 25,2% during the first quarter of 2010, even as the country geared up for next month’s kick-off of the Soccer World Cup.
South Africa in February predicted 2,3% growth for 2010, a figure Gordhan said on Tuesday may be revised upward slightly.
“Preliminary data suggest that we will see moderate economic growth this year,” Gordhan said.
“But last week’s employment statistics were a sobering reminder that more must be done, more urgently, to restructure our economy and create jobs, particularly for young people.”
President Jacob Zuma echoed Gordhan’s sentiments on Tuesday, saying the country’s latest unemployment figures were a cause for concern.
Zuma said the Quarterly Labour Force Survey published by Statistics SA last week indicated that some of the jobs won back in the final quarter of 2009 had been lost again in the early part of this year.
This was “cause for concern and renewed action”, he said while addressing Business Unity South Africa’s (Busa) annual general meeting in Sandton.
He said it was clear that some sectors of the economy were still suffering, even though the country was, overall, beginning to grow fairly well again.
“As we predicted, although the economy was turning positive, the impact of the recession might still lead to some job losses.”
Zuma said the government had developed a range of interventions, such as the Industrial Development Corporation’s (IDC) programme, to help firms avoid retrenchments.
Africa immunised
“I urge all employers who might still face the prospects of lay-offs due to the recession to use these facilities that we have created so that they do not have to retrench workers unnecessarily,” he said.
Zuma said that following his attendance at the World Economic Forum in Dar es Salaam, he had returned “encouraged about Africa’s prospects”.
He had learnt at the meeting that Africa had come through the global economic crisis “much more smoothly” than ever before.
“In the past when the US or Europe sneezed, Africa caught a cold. This time we found that Africa was immunised,” he said.
Many African countries did not go into recession, although their growth rates had weakened for a while.
“Economists believe that one of the main factors immunising Africa is the sound macroeconomic policies that have been followed in many African countries for some years now,” Zuma said.
He had no doubt one of the main reasons for the better economic policies was that most African governments had become more accountable to their citizens.
“Democracy and accountability seem to go along with better economic policies. This is good news for Africa.”
Zuma congratulated Brian Molefe, outgoing Busa president, “for steering this ship forward so successfully to this point”, and he welcomed its new president Futhi Mthoba.
Zuma looked forward to an “ongoing fruitful engagement” with Busa to tackle the serious socioeconomic matters affecting South Africa. – Sapa, AFP