Nationalisation debate damaging - DA

2011-08-09 22:22

Johannesburg - The "mindless calls" for nationalisation irreparably damaged South Africa's attractiveness as an investment destination amidst global economic turmoil, the Democratic Alliance said on Tuesday.

"Government must be alert to the minefield of slowing global growth, falling stock markets and the real possibility of sovereign debt defaults in Europe and respond appropriately by ensuring that our public finances can withstand the increasing pressure," said finance spokesperson Dion George in a statement.

Government could do this by halting inefficient spending in its ranks and "tenderpreneurial scams" which rob the poorest members of society.

"It needs to be clear on the fact that when an economy slows, tax revenues do too and, given that we are already in deficit, there is very little space for manoeuvre. Under these circumstances, economic policies need to be coherent and focused on building, not breaking down, our economic prospects."

George said South Africa had more space to "manoeuvre" than other economies on the brink of default.

He said the country needed to reconsider the structure of the economy - making it more inclusive for all South Africans and decide how best to take advantage of its unique position in the global economy.

The troubling events globally needed a "steady response" from the South African government to prevent a "deepening economic crisis".

The government had to consider the fact that South Africa was an emerging destination with strong infrastructure and a potential gateway to almost a billion people on the African continent.

Investors need confidence

"It remains possible for South Africa to position itself as an attractive destination for long term investment capital, but we need to be desirable to extremely nervous investors. Investors need confidence that our economy will grow.

"To determine medium to long term growth potential, they consider predictive indicators such as potential future economic activity, usually driven by a well educated work force within an environment that facilitates the economic activity that generates growth.

"Under these circumstances wealth increases and unemployment decreases," George said.

Before the current economic crisis, South Africa's growth had already slowed .

"Our trajectory lagged behind those of comparable economies and we missed the commodities boom because government's economic policies acted as a barrier rather than a boost.

"The impact of the initial crisis, the precarious jobless recovery and now a potential double dip recession in Western economies is severely detrimental to our economic outlook."

George's comments followed Standard and Poor's downgrading its credit rating of US government debt from AAA to AA+.

The move, he said, had speeded up an "already steady plunge" in stock market prices around the world.

He said under current conditions, there were concerns that a double dip recession was likely in developed economies such as the US, the UK and in Europe.

- SAPA