SA should look to south for trade, says Davies
BusinessDay - May 21st 2012, 08:58
Demand by SAâ€™s traditional trading partners in the north was likely to remain constrained in the near future and the countryâ€™s prospects for economic growth would increasingly depend on diversifying and strengthening ties with economies in the south and in Africa, Trade and Industry Minister Rob Davies said last week.
Exports to developed countries had remained well below the 2008 peak just prior to the global economic crisis, while the "continued and rapid rates of growth in trade and investment with developing economies China and India were striking", the minister said in his budget vote speech in Parliament.
"As we look ahead, we must also recognise how much, and how fast, the worldâ€™s economy is changing. Much of the European Union looks set to be trapped in recession for some time to come."
The crisis highlighted the need for SA to diversify its trade, and its strategy would focus on the other Brics countries (Brazil, Russia, India and China), high-growth markets in Africa, the Middle East and Asia, and the emerging economies of Turkey, Indonesia, Chile, Vietnam and Thailand.
Mr Davies said growth in emerging economies of the south offered almost "limitless opportunities" for South African businesses.
He also noted that Africa had emerged as SAâ€™s most important market for manufactured exports. However, while Africa was well positioned to become the next global economic growth pole, "its full potential will remain unfulfilled unless we collectively and decisively address the constraints imposed by poor infrastructure, small, fragmented markets, and inadequate economic diversification ... as African economies continue to grow and as barriers to intra-African trade are removed, South African firms will find ever-growing opportunities for profitable business on the continent," said Mr Davies.
Domestically, the department was pursuing a multipronged strategy to support industry, enhance competitiveness and improve the operating environment for business.
The emphasis was to shift away from the consumption-driven and import-intensive growth path of the past. A number of "significant breakthroughs" had been achieved in the stabilisation of the clothing, textiles, leather and footwear industries, the turnaround of the automotive industry, the increase in the business services sector and in the adjustment of public procurement to promote local production.
"There is a strong national consensus that we need to industrialise," Mr Davies said.
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