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South Africa 'largely cushioned from crisis'
South Africa is not facing a recession, Finance Minister Trevor Manuel said on Tuesday, despite major industrialised countries like Japan and the euro zone slipping into negative growth.
- Reuters
- Published: 23:40 November 18, 2008
Cape Town: South Africa is not facing a recession, Finance Minister Trevor Manuel said on Tuesday, despite major industrialised countries like Japan and the euro zone slipping into negative growth.
The Treasury has argued economic fundamentals in Africa's biggest economy are sound and the country is largely cushioned from a global crisis, although growth is seen lower at 3.7 per cent this year and 3.0 per cent in 2009 from an average 5 per cent of the last 4 years.
"There is no recession," Manuel told parliament's finance committee at a briefing on the global crisis, saying analysis by the Treasury did not suggest the country faced two consecutive quarters of negative growth.
"So we are not looking at a recession in South Africa."
Some analysts say the economy may have dipped into decline in the third quarter, given a sharp slowdown in manufacturing and mining output and falling retail sales.
Consumers are under severe strain, battling to cope with a total 5 percentage point increase to 12 per cent in the central bank's repo rate between June 2006 and June 2008. Official data last week showed retail sales falling for the fifth month in a row in September, and by 5.1 per cent year-on-year for the third quarter.
New vehicle sales have been falling for more than a year, and contracted more than 30 per cent last month compared with October 2007. The data has raised speculation interest rates will be cut soon, despite inflation remaining far outside the bank's 3 to 6 per cent target and the rand being sharply weaker this year.
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