SA economy 'strong, and growing'
Posted Fri, 19 Nov 2004
19 November 2004
Economist Mike Schussler says official statistics do not reflect the strong growth in SA's economy, and the fact that it is creating jobs. The Bureau for Economic Research agrees, predicting economic growth and employment generation on a higher and sustained level over the next 10 years.
SA 'poor'? You need your head read
South Africa's economy is booming, and job creation is on the rise. That's according to a leading economist, who says the real growth of the economy is not being measured properly by statistics.
Economist Mike Schussler says official statistics do not reflect the strong growth in the economy, and the fact that it is creating jobs.
The evidence is "overwhelming" that the economy has turned around, Schussler told the South Africa Press Association (Sapa) in Johannesburg this week.
"The South African economy is growing at a faster rate than most realise ... It may already be growing
at 5 or 6% a year. Stats SA [Statistics South Africa] is just not picking it up."
Schussler expects the good times not only to last, but to improve. He also challenged the conventional notion that South Africa is a poor country, quoting World Bank figures based on purchasing power parity that puts the country 19th in the world economic top twenty.
"If you still think this is a poor country, you need your head read."
According to Sapa, Schussler contends that a country where 20-million out of 45-million people have cellphones is not doing badly in the economic stakes. "Employment growth has been going on since the second quarter of 2003, if not as early as end 2002."
The country's gross economic product has also turned the corner, he maintains. "We are now in the longest period of GDP [gross domestic product] growth since World War Two."
The last few years have been the longest spell of formal sector employment growth since the 1980s. "The jobs are real
and more service-sector orientated than before: from call centres to tourism", Schussler told Sapa.
Turning to the rand, Schussler said the currency had been strengthening for 35 months - and was likely to remain strong. He expected the currency to remain stable at around eight rand to the euro. The US currency, he predicted, would weaken further, allowing the rand to strengthen to around R5.50 to the dollar.
With the rand stable against the euro, Schussler told Sapa, it was time for South Africans not to "fixate about the dollar".
'Promising' outlook for next decade
The economy has also received the thumbs-up from the University of Stellenbosch's Bureau for Economic Research, which says the 10-year outlook is "quite promising" and should result in economic growth and employment generation on a higher and sustained level than the last decade.
The bureau's director, Professor Ben Smit, says the short-term outlook for the economy
is also optimistic, but that the question remains whether it can break
out of the 2.5% to 3% growth range - the growth rate offered by official statistics.
According to Schussler, it may already have.
Speaking at a conference in Somerset West this week on "the South African economy - the next 10 years", Smit said it was important that hard-won stability gains were not squandered by inappropriate future macro-economic policies. Monetary and fiscal policy should be sufficiently relaxed to support the quest for higher growth, he said.
Smit said increases in both current and capital spending by the government should make a noticeable contribution to domestic demand over the next decade without having to resort to sustained large budget deficits.
He predicted that the results in average real GDP growth rate would be 3.6% for the period 2004 to 2008 and 4.5% for 2009 to 2013.
The longer term outlook for inflation, Smit said, was also positive; he predicted
an average inflation rate (CPIX) of 5.2% for the period 2004 to 2008 and 5% for 2009 to 2013.
The outlook for employment was also "relatively positive", he said, projecting a sustained improvement in formal sector employment - an average of 1.3% in the period 2004 to 2008 followed by an increase of 1.9% in the following five years.
SouthAfrica.info reporter
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