Cape Town - The fact that South Africa’s GDP managed to expand 3.3% demonstrates what can be achieved when government, business and labour work together, said Jeff Radebe, minister in the presidency responsible for monitoring and planning on Thursday.
Briefing journalists on decisions taken at a cabinet meeting held on 14 September 2016, Radebe said Cabinet was encouraged by the growth in GDP in the second quarter of this year. "The 8.1% increase in manufacturing and 11.8% in mining and quarrying demonstrate the resilience of the economy in this tough economic environment.”
Cabinet’s comments came as economists, the South African Reserve Bank (Sarb) and the International Monetary Fund (IMF) have different views on South Africa’s growth prospects for the rest of the year.
Some economists cautioned although South Africa managed to avoid a technical recession in the second quarter of 2016, the prolonging drought, subdued household spending and confidence and the volatile rand could spell difficulty in the coming months and the jury is still out on whether South Africa will stave off a credit ratings downgrade in December.
In July, the Sarb said it expects 0% growth in the South African economy during 2016 and the IMF projected only 0.1% growth for the year. Many economists are of the view that the outlook for the second half of this year is therefore not that positive and avoiding a ratings downgrade in December is therefore not a given.
President Jacob Zuma, however, is confident that South Africa is sending “positive signals” to investors and ratings agencies, following the 3.3% GDP growth in the second quarter.
Addressing the National Assembly on Tuesday, he said government had “every reason to believe” the collective actions of government, labour and business will result in a better economic performance “in the next few months and years”.
“We are sending a good signal to investors and rating agencies,” Zuma said.
Bloomberg reported on Thursday National Treasury, the Johannesburg Stock Exchange and major banks will meet with investors in the US next month as rating companies prepare to review the nation’s creditworthiness.
The Treasury, the JSE, UBS Group, Old Mutual and Standard Bank Group “are leading a high-level government, business and labour delegation” to New York on October 4 and 5, the stock exchange’s Director of Marketing and Corporate Affairs Zeona Jacobs said in an emailed response to questions on Wednesday.
“The goal of the investor conference is to engage US-based investors making it clear that South Africa is open for business.”
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