The chart and table below shows that South Africa is likely to lag behind it’s peers in emerging markets and developing countries in terms of economic growth. There are many reasons for this, with Minister Gordhan arguing in the Medium Term Budget Policy Statement with reference to meeting the challenges that we face:
For us as a nation to achieve this ambition requires deep-rooted transformation of our economy that removes the many barriers to growth and development
The MTBPS as we have argued provides a modest set of responses to tackle the transformation of the economy. The projections are however extremely worrying in that the conventional wisdom suggests that an economic growth rate of 6-7% is needed to reduce unemployment. Minister Gordhan has in fact argued that we should set a target of 7% economic growth for 20 years. He argued in an address to the Land Bank that:
We have to ask ourselves whether we can create the partnerships necessary to deliver this kind of growth which in turn will deliver jobs.
“If we set ourselves that goal, we need new ways to have a willingness to do things differently,
The data is thus revealing in that we are far from meeting the goals of 7% economic growth over the medium-term, and we can infer that the necessary partnerships have not been created. The overriding picture of continued high unemployment at the current projected rates of economic growth. (It is not all doom and gloom, and Zapreneur will over the next month profile some of the innovative projects being undertaken). Below is the data provided by the National Treasury comparing South Africa to it’s peers and developed economies.
The data shows that:
- South Africa is more like a developed country in terms of economic growth, with lower levels of economic growth.
- South Africa’s peers in the emerging economies, developing Asia, and Sub-Saharan Africa will experience higher levels of economic growth.
- Over the medium-term the challenge of unemployment will not be tackled purely by focusing on economic growth. The structural changes required in the economy, in combination with social policy will be needed to shift South Africa to a higher economic growth rate.
- The implications for small businesses are that strategies will need to both recognise that South Africa will grow more slowly than its peers, but that 4% economic growth is “not nothing”.
Projected Economic Growth in 2013
|Region / country Percentage||2011||2012||2013|
|Emerging markets and developing world||6.4||6.1||6.5|
|Middle East and North Africa||4||3.6||4.3|