South Africa’s economic recovery risk is “high”: Finance Minister

Cape Town: South Africa’s economic recovery, plagued by pandemics, riots, transplants and high unemployment, is difficult, South Africa’s most industrialized economy finance minister warned Wednesday. Enoch Godonwana said in an annual budget statement from the government that economic growth is projected to be 2.1% this year, averaging 1.8% over the next three years.

“Our economic recovery is uneven and the risks remain high,” he said. “We have to be careful.” The restrictions imposed last year and 2020 to curb the spread of COVID-19 stagnated most economic activities and forced millions of people unemployed. ..

With more than 3.6 million COVID cases and nearly 99,000 deaths, South Africa is the most devastating country on the continent. Godonwana said his budget aims to strike a “significant balance between saving lives and livelihoods while supporting inclusive growth.” South Africa was also hit by a riot last July, sweeping more than $ 3 billion from its economic books after businesses were looted in two of the most populous states, Gauteng and Kwazur Natal.

inequality

Anxiety stemming from the imprisonment of former president Jacob Zuma for refusing to appear in front of Investigator Graft has left millions of people unemployed. Unemployment rates range from 35 percent of the general population to 65 percent of the youth. Analysts say unemployment is a South African time bomb, attracting many economic migrants from other African countries. The country has experienced a series of protests over the past few weeks against the employment of unskilled and sneaky foreign migrants.

Nearly half of the 59 million people in one of the world’s most unequal countries receive monthly payments for poverty and unemployment. “Efforts to address inequality are needed, but it will be even more difficult given that South Africa is already spending 3.3% of its GDP on social spending,” said an analyst at Financial Advisory Group Consult. Hannes van den Berg said.

He also warned against creating dependence on social subsidies rather than creating jobs. The government plans to secure approximately R6 billion ($ 5 billion) for the job creation program in the medium term. Government debt is projected to increase from the current 4.3 trillion rand to 5.4 trillion rand in the medium term, calling debt burden a “serious concern,” Godonwana said. The cost of paying off debt each year exceeds the budget allocated to major ministries such as health and police.

Godonwana has promised to stabilize debt and reduce its consolidated budget deficit from 5.7% of GDP to 4.2% of GDP by 2025. .. “Corruption is a big blow to our country,” said Godonwana. “It has reduced the potential for our economic growth, made us financially vulnerable, and significantly weakened our nation’s capabilities.” — AFP.