Johannesburg - The projected growth rate of 3.5 percent by 2016 – as set out in October’s medium-term budget policy statement – was woefully inadequate to meet South Africa’s socio-economic challenges, Business Unity SA (Busa) said yesterday.
Raymond Parsons, a special policy adviser to the business apex body, said that in recent years growth had been lower than in peer emerging markets and commodity exporters.
In Busa’s view this reinforced why the National Development Plan (NDP) “should be implemented sooner, rather than later, if more positive outcomes are sought”.
“Remember that the NDP is already a compromise plan.”
Parsons defended the NDP, saying it differed from previous economic policies in that it was holistic and was the result of an inclusive process.
Presenting Busa’s economic and business outlook for next year, Parsons said strikes and instability in labour relations, an underperforming mining sector, rising costs of doing business, a volatile rand and subdued domestic consumer spending presented “soft” conditions on the horizon for manufacturing.
Parsons said the global outlook for next year had improved moderately in developed economies. Growth would continue in emerging markets but at a slower rate than in 2013.
“South Africa must look internally to alleviate domestic growth and employment constraints if it wants to raise its growth rate above the current 1.8 percent expected in 2013.”
The country must concentrate on the domestic factors over which it had control so it could move forward with planned structural reforms to boost growth and create jobs.
South Africa had remained a modest performer, with growth of between 3 percent and 3.5 percent. “It has not discovered within itself the magic to transform itself towards 5 percent or 6 percent, or even higher average growth performances – as some other emerging countries have done.
“There has been slippage in South Africa’s global competitiveness in recent years.”
He said that after a short, speculatively consumption-dominated boom between 2004 and 2007, and a short sharp recession following the global economic crisis in 2008 and 2009, South Africa now found itself once again constrained in a 2.5 percent to 3 percent growth trajectory, with a significant loss of growth drivers and focused purpose.
“Many analysts believe that South Africa’s long-run growth performance could not exceed 3.5 percent – at best – unless the present constraints and bottlenecks are progressively lifted. These challenges are not insurmountable.”
He said the good news was the country now had the NDP. While it claimed to be neither perfect nor complete, it set out a clear roadmap and firm proposals to tackle South Africa’s socio-economic challenges.
Parsons said the NDP, the New Growth Path and the Industrial Policy Action Plan needed to be aligned.
He said: “While the three documents agree that employment growth is South Africa’s top priority, they offer conflicting assessments of what is obstructing employment growth, what sort of new jobs should be created, and at what pace.” - Business Report