South Africa: Economic growth uneven
Tag: South Africa, South Africa Economic, growth
Summary: The minister described the current global environment as "dangerous" adding that global economic growth had remained weak this year.
The minister described the current global environment as "dangerous" adding that global economic growth had remained weak this year.
Pretoria - Economic growth is uneven and slow, Finance Minister Pravin Gordhan said on Friday.
"Growth in output in our own economy is uneven and slow, though consumption spending is still buoyant," the minister said, delivering the National Treasury Budget Vote in Parliament.
Broad based transformation and extending opportunities to the unemployed were some of the challenges faced by South Africa.
The domestic economy, he said, was showing some signs of moderate growth but the external environment remained weak.
Data had shown that in the final quarter of 2011, household consumption and investment were still growing robustly. Consumption grew by 4.6 % in the quarter, investment by 7.2 % and government consumption grew by 7.3 %.
"National Treasury forecasts that household consumption and investment will continue to grow robustly in 2012, and government spending will also support growth," he said.
Also, Gordhan noted that monthly figures were volatile with investment being held back by uncertainties globally and domestically.
"The main risks to the economy remain external," said the minister, adding that political developments in the Eurozone had heightened the risk that Greece will exit the single currency within the next year, although there was little clarity on how this would be achieved and what its impacts would be.
"More serious for both the global economy and the potential impact on South Africa is the continuing vulnerability of several larger European economies, including Spain," said Gordhan.
He said he expected a shallow recession in the Eurozone but that the risk of a deeper contraction had grown since the Budget that was tabled in February.
Meanwhile, several African economies and the developing world continue to grow quicker than the developed economies with trade and investment patterns shifting.
He said both South Africa's international relations and trade and industry policies had to adapt to this rapidly changing global environment, with South Africa needing to join its African counterparts in boosting industrialisation on the continent and increasing intra-African trade.
The minister said the global financial crisis had also highlighted the inadequacy of international cooperation.