Treasury bullish SA will beat the economic blues

2012-10-27 11:01

National Treasury director-general, Lungisa Fuzile, believes the government’s planned infrastructure investment programme will keep the economy afloat

Top Treasury official, Lungisa Fuzile, is confident that the economy will grow faster over the next few years despite a weak global economy and labour unrest, which have cost the platinum and gold industries R10.1 billion.

Fuzile, the director-general of the National Treasury, believes that the multibillion-rand infrastructure investment programme and a rebound in the European economy, South Africa’s biggest trading partner, will keep the local economy ticking along.

“There will be growth in our economy. Europe will not stay in recession for another year.

“Domestically, there are no constraints that are holding our economy back. Medupi (power station) is on the verge of switching on and this will unblock constraints derived from energy,” he said.

He said state-owned transport and logistics company Transnet had increased tonnage capacity for exports leaving the country through the port of Richards Bay, removing constraints that have been making it difficult for exporters to reach international markets during boom times.

The government has cut its growth forecast for this year to 2.5% from 2.7% due to a softer global economy and labour strikes, particularly in the mining sector.

But growth is expected to improve next year to 3% and 4.1% in 2015.

Fuzile said South Africa would lift growth by increasing mineral exports to China and manufactured exports to the rest of Africa, where a young, middle class was growing.

According to Treasury documents, the Southern African Development Community is South Africa’s second-largest export market after the European Union.

The share of manufactured goods to the Southern African Development Community region accounts for about 21.8%.

“With strong growth forecast for the next five years, the Southern African Development Community region could soon become South Africa’s biggest market for manufactured exports,” documents read.

In South Africa, Fuzile said low interest rates and jobs emanating from the ongoing R850 billion infrastructure programme will keep the economy buoyant, particularly consumption spending.

Infrastructure investment is expected to reach R3.2 trillion by 2020.

The Treasury says in its documents that the strikes have cost the mining industry R10.1 billion so far this year.

“Declining mining output and the spread of strike activity have depressed activity in related industries – including manufacturing, logistics and services – with negative consequences for gross domestic product, tax revenue, exports and employment.

“The impact will be larger if strike activity is protracted,” the Treasury says.

Illegal strikes in the platinum and gold sectors are ongoing and some mining companies have fired thousands of workers.

Adcorp labour market analyst Loane Sharp has even painted a grim picture of how the wildcat strikes will affect the economy.

He believes economic growth could tank to 1.5% next year due to the labour unrest, triggering a jobs blood bath in the mining sector over the next five years.

“We expect job losses of 200 000 in the mining sector over the next five years.

“These job losses cannot be avoided because they are a function of our labour laws, which will not be reformed due to the Cosatu-ANC alliance,” he said.

The country’s main labour federation, Cosatu, and the governing ANC are part of a tripartite alliance, and Cosatu often blocks attempts to tweak the legislation to make it easier to fire workers.

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