Business calls for cool heads
Fri, 21 Nov 2008
South Africa's economic growth will still be positive in 2008/9, Business Unity South Africa said on Thursday.
"... Although SA will not escape the effects of the global economic slowdown, economic growth will still be positive in 2008/9," the organisation said in a statement.
Reacting to the statement on the economic outlook made to Parliament this week by Finance Minister Trevor Manuel, Busa said that it broadly agreed with Manuel's assessment of both the global and domestic economic situations.
Manuel told MPs in the National Assembly on Tuesday that South Africa would not follow the rest of the developed world into a recession.
Busa said that nevertheless, the South African economic situation needed to be carefully managed, as the global slowdown had been superimposed on an economy which had in any case come to the end of its longest economic upswing on record.
Busa emphasised the need to maintain certainty and predictability in macro-economic policy and said it would not be in South Africa's interests "to depart from prudent economic policies."
"These have helped to cushion the global impact to date and they have up until recently enjoyed progressively positive international credit ratings.
"If the country is to continue to attract foreign investment it is essential to maintain confidence in our economic policies and raise the growth rate in the economy."
Busa said foreign capital inflows were crucial to finance the deficit on the current account of the balance of payments, which would come under increasing pressure as exports suffered because of the world economic recession.
"Busa therefore urges that South Africa should not espouse any ill-conceived policies that will damage its capacity to attract capital, raise its growth rate and maximise the number of jobs created at any given growth rate."
South Africa needed to achieve a much higher growth rate with a sustainable current account deficit, for which it would have to remain globally competitive.
"Busa has therefore begun to engage on its economic concerns with the ANC leadership and hopes to continue to have a valuable exchange of views in the challenging period ahead."
Sapa
