Speaking at the 13th Annual National Economic Development and Labour Council (Nedlac) on Tuesday, the President mentioned that the latest growth figures for the country indicated a tough road ahead.
“This combination of global and domestic economic circumstances provides a real test for our economic policies and this is likely to continue into 2009.
“Whereas our economy had maintained a growth rate of close to 3% per annum in per capita terms since 2004 until early this year, the recent results show that we have entered different times.
“The last quarter has registered a growth rate of 0.26%, which indicates that our growth prospects are taking a dive,” the President said.
The rise in inflation and associated interest rate hikes and the relative weakness of the Rand has placed increased pressures on the South African economy, affecting the poorest of the poor in particular, the President said.
Besides the sub-prime mortgage crisis that spread through the United States and Europe, the recessionary pressure around the world and the rising food and fuel prices will affect growth prospects in emerging markets, in particular.
With regard to the theme of the Nedlac summit: “Globalisation, Growth and Social Justice - The Role of Social Dialogue”, the President highlighted that there is nothing inherently destructive in the process of globalisation.
“It is a process that countries have to engage with in order to make globalisation a positive force for all people.
“An important way in which we are engaging with globalisation is through our efforts at strengthening the regional economy,” President Motlanthe said.
The launch of the Southern African Development Community (SADC) Free Trade Area (FTA) is an important milestone to improving regional integration through increased regional trade, he said.
The President noted that unemployment in the country was still unacceptably high and that the gap between the rich and poor had also widened.
Government is aware, he said, that more investments need to be made into transport and energy infrastructure in order to deal with the constraints the country has experienced in the recent past.
“At the same time we need to address the ongoing challenge of ensuring an adequate supply of skills to the economy in both private and public sectors,” the President said.
General Secretary of the Congress of South African Trade Unions (Cosatu) representing the Nedlac Labour constituency, Zwelinzima Vavi highlighted that there is no way that South Africa, as a developing market, can escape the affects of a slowdown on international markets.
Even before the crisis broke, South Africa's unemployment rate had already started to creep upwards from 23.1% in the second quarter of 2008 to 23.2% in the third quarter.
“... [there was also] a 0.4% drop in the total number of people employed to 13.66 million, which leaves 4.12 million officially unemployed,” Vavi said.
Nedlac is still discussing the issue of food price increases, which has been rising much faster than overall inflation, Vavi explained.
In March 2008, the Consumer Price Index excluding interest on mortgage bonds (CPIX) rose by 10.1%; while, inflation for the very low earners rose at a rate of 13.5%, mainly due to rising food prices.
Vavi said he did wish to congratulate government on amendments to legislation that targets individual company directors found guilty of price-fixing after a number of price collusion scandals emerged in recent years.
President of Business Unity South Africa (BUSA) and Nedlac's Organised Labour representative, Brian Molefe, said emerging market growth is expected to halve in 2009, meaning South Africa will not be spared the affects of the economic slowdown.
“As demand for our commodities falls throughout Asia, the European Union (EU) and Europe [with growth in these countries faltering], it is not a rosy picture for us at all.
“In South Africa, we need a strong developmental state in order for business to strive,” said Molefe.
Article published courtesy of BuaNews
