SA in better position than many to weather economic turmoil
Thématique :
sud afrique
Although South Africa's economic growth likely would slow further in 2009, the country would be in a better position than many developed countries to withstand a global economic downturn, Econometrix director and chief economist Dr Azar Jammine asserted on Monday.
"There will be a further slowdown in global growth in gross domestic product over the next year, but this will not be massive," Jammine commented during a French South African Chamber of Commerce and Industry event in Johannesburg.
Because of the close correlation between South Africa's economic growth and that of other emerging markets and developing countries, it likely would have enough internal momentum and the ability to successfully trade with other emerging markets to withstand the global downturn.
This meant that while South Africa would not be completely immune to the effects of the financial crisis afflicting world markets, it would probably not affect the country on the same level as that experienced by the US and Europe.
Meanwhile, Jammine said that while there was a lot of political uncertainty in South Africa at present, following the ousting of former President Thabo Mbeki, he was optimistic that "pragmatism will prevail".
However, he said that the weakness of the rand, which hit a six-year low on Monday, had more to do with global economic turmoil than local factors.
The rand was the "primary vehicle through which international investors express their risk aversion to emerging markets", Jammine said.
He also commented that South Africa was increasingly becoming the base from which these investors entered emerging markets, especially in Africa.
Jammine said that this was owing to the fact that South Africa had one of the largest current account deficits, had one of the lowest foreign exchange reserves in the world, and that the rand was one of the most highly traded currencies in the world.
However, he explained that it would be a challenge for South Africa's new president, to be elected next year, to continue achieving the past levels of economic growth during a period of global economic slowdown.
This, after the country had, under former President Mbeki, achieved high levels of economic growth, which had also been coupled with high levels of global economic growth.
Nevertheless, Jammine expected the economic slowdown in South Africa to start turning around by the third quarter of next year.
Further, he noted that while the retail and consumer segments of the economy had taken a lot of strain not all segments of the economy were suffering.
He explained that the construction sector, for one, had been doing well given the levels of fixed investment in infrastructure.
"There will be a further slowdown in global growth in gross domestic product over the next year, but this will not be massive," Jammine commented during a French South African Chamber of Commerce and Industry event in Johannesburg.
Because of the close correlation between South Africa's economic growth and that of other emerging markets and developing countries, it likely would have enough internal momentum and the ability to successfully trade with other emerging markets to withstand the global downturn.
This meant that while South Africa would not be completely immune to the effects of the financial crisis afflicting world markets, it would probably not affect the country on the same level as that experienced by the US and Europe.
Meanwhile, Jammine said that while there was a lot of political uncertainty in South Africa at present, following the ousting of former President Thabo Mbeki, he was optimistic that "pragmatism will prevail".
However, he said that the weakness of the rand, which hit a six-year low on Monday, had more to do with global economic turmoil than local factors.
The rand was the "primary vehicle through which international investors express their risk aversion to emerging markets", Jammine said.
He also commented that South Africa was increasingly becoming the base from which these investors entered emerging markets, especially in Africa.
Jammine said that this was owing to the fact that South Africa had one of the largest current account deficits, had one of the lowest foreign exchange reserves in the world, and that the rand was one of the most highly traded currencies in the world.
However, he explained that it would be a challenge for South Africa's new president, to be elected next year, to continue achieving the past levels of economic growth during a period of global economic slowdown.
This, after the country had, under former President Mbeki, achieved high levels of economic growth, which had also been coupled with high levels of global economic growth.
Nevertheless, Jammine expected the economic slowdown in South Africa to start turning around by the third quarter of next year.
Further, he noted that while the retail and consumer segments of the economy had taken a lot of strain not all segments of the economy were suffering.
He explained that the construction sector, for one, had been doing well given the levels of fixed investment in infrastructure.
