News agency, Cape Town, South Africa
Monday April 22nd 2019

Hold the champagne, says Marcus

Although the South African economy is emerging from the recession, it’s not yet time to pop open the champagne as the global economic crisis is still with us, says South African Reserve Bank Governor Gill Marcus.Addressing business leaders at the Western Cape Investment and Trade Promotion Agency (Wesgro) Investor Luncheon at the Radisson Blu Hotel in Cape Town yesterday on Tuesday, Marcus discussed the challenges facing the local economy and the implications these had for monetary policy and financial stability.

Marcus was cautiously optimistic, saying an average crisis takes about four and a half years to resolve and South Africa is at the end of its third year, with at least another year of tough times to weather.

“The economy has emerged from the recession but the crisis is still with us,” she said.

She said the central bank was trying to understand how the economic crisis affected the local economy in relation to the global economy, as many of our economic problems were “deep rooted and required coherent structural reforms” that were “not easily solved”.

Statistics from Wesgro have it that South African economic growth slowed down in 2008, to decline sharply during the first half of 2009 in line with a “synchronized downswing in global economic activity”.

Although the 2010 World Cup and a recovering global economy brought an upswing, with growth accelerating from an annualized rate of 0.5 percent in the second half of 2009 to 3.9 percent in the first half of 2010, it started dropping again in the second quarter.

This slower second quarter growth, stated Wesgro, was mainly due to a 20.8 percent contraction in the mining sector during this period.

The manufacturing sector had also decreased from 8.4 percent in the first quarter to 6.9 percent in the second quarter, and “remains under pressure”, said Marcus, but there were “indications that household expenditure is recovering”.

But one of the biggest economic problems facing the country, said Marcus, was unemployment.

Wesgro statistics showed employment in the domestic economy stood at 25.3 percent by the end of the 2010 second quarter.

This, said Marcus, could not be solved by interest rates alone.

There needed to be a focus on investment in infrastructure in order to provide jobs.

The unemployment level of South African youth, standing at 50 percent, coupled with “under-education”, needed specific focus and a “concerted effort” was required to address their future.

“If you don’t address education (both short and long term), you will not be able to address unemployment.”

Efficiency at local government level also needed to be addressed, she said, as lack of delivery at this level came at a “huge cost to the economy”.

“We need an efficient civil service at all three levels (of government). There is room for improvement.” — West Cape News

Tags: 2010 World Cup, cape town, gill marcus, global economic crisis, household expenditure, reserve bank governor, south african economy, south african reserve bank, wesgro

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