South Africa's finance minister says
the continent's largest economy is expected to have a slow recovery from the
global economic crisis.
Gordhan says the crisis has had a significant impact on South Africa, as the
nation's first recession in 17 years extended into the second quarter of the
year. Gordhan is predicting growth of
between two and a half and three and a half percent for the next few years.
Shapiro, a director at Sasfin Securities in Johannesburg, says a lagging
recovery is no surprise.
went into the so-called downturn behind everybody else and it's probable that
we will come out of it behind everybody else," he says.
nations were actually concentrating…on cutting back, I think we just
lagged. So…you'll find that our interest
rate cuts came a lot later. Our housing
market is still under pressure. So I
would expect this recession here to extend for a few more months," he says.
South African economy, he says, "relies heavily on what happens in the rest of
the world" because it is mainly a commodity producer.
have to wait for the real demand for materials to take place. Not the financial demand, where we start to
see oil prices and commodity prices go up….
But I think we need to see real demand coming through as well," he says.
Africa's mining sector has also suffered because of the drop in demand for
says, "We've lowered interest rates and I think we're expecting that to kick in
by yearend. We'll start to see spending
pick up and consumers feeling a little more comfortable about things."
Predicted growth rate raises concerns
he says, it's" pretty serious for us because we have a very high level of
unemployment. The official rate is 23,
24 percent. I think it's probably even
higher than that."
economic growth rate of two and a half to three and a half percent may do
little to improve the unemployment situation.
that is the case, then I think we're going to have to make other arrangements
or we're going to have to look carefully at stimulating the economy and
addressing what is a very threatening issue, which is unemployment," he says.
World Cup 2010
South Africa is hosting the World Cup
next year. The soccer championship is
considered the world's biggest sporting event.
Shapiro thinks the nation's economy would be in worse shape if South
Africa had not been the host country.
However, he says, overall, it's not been a big economic stimulus.
will give us a bit of a kicker. (But) in
terms of the amount of money that's being spent to get us up to speed in terms
of stadiums and so on, it's not very huge relative to the overall
infrastructure package," he says.
World Cup-related construction has resulted in new roads and hotels, among
Shapiro says it'll take more than the World Cup to rev up the economy and
Government can't do it alone
"I think the government's battling a
little bit. In other words, it's not
coping and I think we need to formulate a plan here where we can actually bring
in businessmen without any political agenda, who are not driven by money, who
are not driven by…promises of big contracts…but who can actually help the
administration," he says.