Jobs crisis dogs S.Africa’s growth: finance minister
South Africa's economy bounced back strongly from recession with 4.8 percent growth in the first quarter of 2011 but still faces rampant unemployment, the finance minister said Tuesday.
“Since the middle of last year, our economy has grown strongly — driven by buoyant consumer spending, continuing high commodity prices and a recovery in the motor industry,” Pravin Gordhan told parliament.
First quarter Gross Domestic Product was up 0.3 percent compared with the last three months of 2010, he said.
“The latest GDP data … indicates growth of 4.8 percent on an annualised basis, with the manufacturing sector leading the recovery despite difficulties associated with the relative strength of the rand,” Gordhan said.
“Employment growth is far too slow, however. We face a very serious unemployment challenge, particularly amongst our young people.”
Gordhan on Tuesday launched a nine billion rand ($1.3-billion, 911-million-euro) fund that aims to create 150,000 jobs over three years to fight a 25 percent unemployment rate.
South Africa wants to create five million new jobs by 2020 with joblessness seen as the biggest challenge to the government amid the world’s sharpest divides between rich and poor.
The Organisation for Economic Cooperation and Development said last year that the economy would need to grow by at least five percent a year to make a dent in unemployment.
While South Africa’s growth outlook had improved, Gordhan told reporters earlier that the world economy still faced much uncertainty.
“We’re living in a world where nobody knows quite what the perfect answer is … So in that context South Africa is in a very fortunate position to have its steady four percent growth or thereabouts. For us the challenge is to build on that and accelerate our successes.”
South Africa’s rand currency has made strong gains this year, reaching a one-month high of 6.675 to the dollar on Monday as investors are attracted by the country’s relatively high interest rates.
South Africa’s benchmark rate is at 5.5 percent, compared with rates near zero in the United States and just 1.0 percent in the eurozone.
The strong currency has hurt South Africa’s exports but also helped cushion the effects of high global oil and food costs on local prices.
Gordhan said South Africa would continue offsetting the robust rand, including by accumulating foreign reserves.
“But let me make it very clear that we’re not about manipulating currency.
“We’re certainly about doing the things that are within the acceptable bounds of policy action, such as accumulating reserves and taking those measures that can actually mitigate the worst effects of the impact of capital flows in our own economy,” he said