Hanna Barry
1 minute read
26 Jun 2014
6:00 am

South Africa slowdown self-inflicted – Nene

Hanna Barry

The domestic economic slowdown has been largely driven by local developments, Finance Minister Nhlanhla Nene says.

FILE PICTURE: Finance Minister Nhlanhla Nene. Picture: GCIS

Addressing gathered businessmen this week, Nene said business confidence remained low and growth in private sector investment lost further momentum in the first quarter of 2014, slowing to 1% from 2.4% in the previous quarter.

More than 5 000 private sector jobs were lost in the fourth quarter of 2013, marking three consecutive quarters of job losses.

Meanwhile, the drop in platinum production as a result of the strike accounted for about 19 percentage points of the roughly 25% contraction in the mining sector in the first quarter.

“The ending of the strike should have a positive impact on sentiment and ultimately economic growth,” Nene said.

That South Africa’s GDP slowdown is locally driven was “unlike in preceding years,” Nene said, presumably referring to the impact that depressed growth in developed economies has had on South Africa.

“Economic activity in advanced economies continues to improve albeit at varying speeds … (and) is expected to increase by 2.2% this year,” Nene said, noting that US recovery was gaining traction.

Speaking at a separate function, Stanlib chief economist Kevin Lings said the US had recovered the 8.7m jobs it lost at the peak of the recession, adding another 89 000.

The world’s largest economy is adding about 200 000 jobs every month, Lings said, and is likely to experience economic growth in the order of 2.5% to 3% in 2015.

“The world is getting better, but South Africa is getting worse. We are not in a recession, but significantly broad-based job losses would push the economy into recession,” Lings warned.