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South Africa Economy Continues to Grow


Last year the South African economy created nearly 700,000 jobs, and enjoyed its 11th year of sustained growth. The official unemployment rate remains around 27 percent.

The South African economy added 658,000 jobs last year. And, experts generally agree that soon-to-be-released statistics will show that the economy grew by at least five-percent - the highest rate in 11 years of sustained growth since 1994.

The markets have also been doing well during the past five years, attaining their highest ever level on Tuesday. The rand, the local currency, which six years ago plunged to nearly 15 to the dollar, has in succeeding years been among the best performing currencies across the globe, and is currently around six to the dollar.

But despite these achievements, which have brought confidence to many South Africans after years of gloom, the official jobless rate remains between 26- and 27 percent. The so-called expanded or unofficial rate, which includes people who could be employed, but who are not currently seeking work, is at 38 percent.

Senior economist Johan Botha, of Standard Bank in Johannesburg, says a high population growth rate is a major contributing factor toward high joblessness. Botha adds that in the past decade, as South Africa returned to the global community following the end of apartheid, the country had to overhaul its economy.

"And at the same time we have gone through a whole period of restructuring the economy, of opening up the economy and bring with that huge competition from all over the world," Botha says. "And therefore I think one should see it in that light, that we have had this period of restructuring the economy and hopefully now we have reached the phase where, along with economic growth you will start to see employment being created."

Economic statistics from the past year indicate that South Africa's economy has started to create jobs. But economist Botha says higher growth over a longer period will be needed to bring the unemployment rate down to manageable levels.

"I think the general consensus is that [five percent] is maybe not enough, and that we should at least look at [seven percent] or maybe slightly lower which is also difficult," Botha says. "And if we can get that, and it is still a question of, that it must be sustained over time, I will perhaps even talk decades rather than years, so I would think if we can get growth of six-, seven percent for two decades, then I think the unemployment situation will be under control."

Last week a panel of economic experts from leading American and British institutions told South African Finance Minister Trevor Manuel that the economy is capable of growing much faster.

The experts, who came at the invitation of President Thabo Mbeki and were asked to offer new ideas, told the country's financial policy makers to be more ambitious. Minister Manuel, who this year is expected to have a tax surplus of as much as $10 billion, will likely indicate where he intends to take economic policy when he delivers his annual budget to parliament next month.