SA needs 10% growth for job creation, warns bank
Business Day - Nov 8th 2011, 08:16
According to the Development Bank of Southern Africa, the country’s gross domestic product needs to grow by 10% per year to create 5-million jobs by 2020
South Africa needs to grow its gross domestic product (GDP) by at least 10% a year if it is to create half a million jobs each year for the next decade, the Development Bank of Southern Africa (DBSA) said on Monday.
The government’s new growth path aims to increase economic growth to sustainable rates of between 6% and 7% a year to create 5-million jobs by 2020 and reduce the unemployment rate to 15%.
Addressing the media in Pretoria at the launch of the bank’s development report for 2011, titled "Prospects for South Africa’s future", Sinazo Sibisi, divisional executive for planning at the DBSA, said GDP growth to date had been volatile and potentially unsustainable.
"Inefficient logistics systems and challenges in energy and water security have acted as constrains to growth, imports continue to outstrip exports, and new opportunities for a more balanced trade regime in emerging markets will not be easy to realise," Ms Sibisi said.
Last month, the country’s GDP was revised downward to 3,1% in Finance Minister Pravin Gordhan’s mid-term budget policy statement, somewhat below the projection at the time of the budget in February.
Mr Gordhan said the slowdown in the global economy and continuing uncertainty associated with the unresolved European debt crisis and sluggish growth in the US had to be taken into account.
"We saw a gradual recovery last year and an annualised GDP growth rate of 4,5% in the first quarter of this year, but in the second quarter, growth slowed to 1,3%," he said. "For 2011 as a whole we now expect growth of 3,1% ... For the period ahead, growth is expected to be 3,4% next year, rising to just more than 4% in 2014 and 2015."
On Monday, Ms Sibisi said South Africa’s global competitiveness depended on the sustainability of its growth. "An inadequate skills base, combined with technological, financial and institutional constraints, is likely to impede the achievement of renewable and green economy targets," she added.
Ms Sibisi said whether the GDP growth rate was 7% or 10%, the key question was where this growth and job creation would come from.
To realise the growth potential of the mining and agricultural sectors, she said, the government had to move swiftly to resolve policy uncertainty in these industries.
"Since 1994, there has been contraction and stagnation of the mining sector despite a commodities boom. While key stakeholders within the sector have developed a strategy to address sector challenges, ongoing political uncertainty will continue to constrain growth," she said.
"In the agricultural sector, we also need to improve the Department of Rural Development and Land Reform’s ability to drive a coherent policy agenda that promotes better integration between land reform and use, agrarian reform, commercial agriculture value chains and strategies to target smallholders as well as economic development," Ms Sibisi warned.
Also speaking at the event, Ravi Naidoo, DBSA group executive, said there was little chance that South Africa would attain 7%-10% GDP growth in the next few years.
"But the things that must be done now must be done with the view that over time we need to have very high levels of growth to actually reach that momentum," he said. "You have to put in new infrastructure and sectoral strategies."
He added that while the government’s new growth path was important, it was more of a long-term solution. "There is a need for patience in terms of how we deal with the long-term issues," he said.
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