South Africa’s weak employment situation means it is one of the few economies in sub-Saharan Africa that has been losing steam, said a senior economist at the UN Conference on Trade and Development (Unctad) delivering a key report.
Alfredo Calcagno, Unctad head of macroeconomic and development policies was speaking at a press conference to present the World Economic Situation and Prospects 2015.
Growth rates in developing countries and economies in transition diverged more last year, as a sharp deceleration occurred in many large emerging economies, particularly in Latin America and the Commonwealth of Independent States (CIS), the report said. In contrast, East Asia, including China, experienced only a mild slowdown, while India led South Asia to a moderate uptick.
“Among the developing countries, Africa’s overall growth momentum will continue, with GDP growth expected to accelerate to 4.6 percent in 2015 and 4.9 percent in 2016,” the report states.
Calcagno said: “Sub-Saharan Africa, excluding the Republic of South Africa, has been growing.”
This came as the International Monetary Fund dropped its forecast for South Africa’s economic growth in 2015 to 2.1 percent
According to Business Report,
this is a decrease of 0.2 percent from the IMF’s October 2014 forecast.
The forecast for local growth for next year was also reduced to 2.5 percent, down by 0.3 percent, according to the report. The RMB Global Market Research said its outlook on South Africa remained bearish.
STRUCTURAL CONSTRAINTS
“While the oil price will provide a much-needed reprieve in the short term, export prices remain depressed,” the organisation was quoted as saying.
It said structural constraints on electricity supply, transport infrastructure and labour productivity would continue to plague the economy for the foreseeable future.
The global lender also lowered forecast growth for South Africa’s biggest trading partner, China, to below 7 percent, according to the report.
Calcagno noted that “South Africa has been losing steam”, while the Africa region’s fastest growing economies were not oil exporters, but East African economies such as Kenya, Ethiopia and Rwanda.
Asked why South Africa had been losing steam Calcagno said: “One reason is the weak employment situation...”
South Africa’s employment rate for 2014 was an estimated 25.4 percent.
Calgano said that in the mining sector there had been a “number of supply disruption that affected growth,” an apparent reference to strikes last year in the South African mining industry. The UN economist said that for a country like South Africa, wage earners were very important, whereas in the rest of Africa, many people are self-employed.
Cape Argus & Sapa