The South African economy appears to grow too slowly to address some of the big problems the country has, Nedbank senior economist Nicky Weimar said.
These problems included poverty, unemployment and inequality.
Weimar addressed business people at the Randpark Golf Club. She sketched an economic background in light of Finance Minister Pravin Gordhan’s delivery of the National Budget Speech on 26 February.
The real challenge of the budget is to reduce the country’s deficits. “Our economy appears to lose momentum and this started with the global recession in 2009,” she said. “South Africa has a small economy and a large fraction is made up of imports and exports, so we are always affected by a global economic crisis.”
Weimar added that the recovery of exports since the 2009 collapse had been slower than those of imports. “We have lost international competitiveness due to surging production costs because of rising electricity prices, insufficient power supply and poor service delivery. From 2007 to 2012 there was an increase of 97 percent in strikes. “The strikes in this period were more disruptive than in previous periods, and they impacted on productivity.”
However, domestic spending has kept the economy going. “There has been a rapid growth in government consumption expenditure. New schools and clinics were built, rail capacity expanded. More civil servants were employed.”
Weimar said the real expenditure of the budget was social protection – 60 percent of the budget. This included recreations and culture, housing and community amenities, education and social grants.
Even though the budget had negatives such as the slow pace of employment, a positive aspect was that there was increased control over government spending, Weimar highlighted.
