Increase savings, investment: Mbeki
Bathandwa Mbola
28 July 2008
Developing countries, such as South Africa, need to increase savings and investments to mitigate the effects of the global economic slowdown, says President Thabo Mbeki.
Briefing the media after last week's Cabinet meeting, which looked into how the slowdown would affect both developed and developing countries, Mbeki said rising food and oil prices would see the world's economic growth slow to 3.7% in 2008, down from 4.9% in 2007.
Investment to combat 'stagflation'
South Africa and other developing nations with large current account deficits and high inflation faced a risk of negative investor sentiment, Mbeki said, adding that one of the ways in which developing countries could mitigate this risk was by increasing savings and investment to take advantage of global and continental opportunities.
"The key challenge for the South African economy is to ensure that at the end of the global economic adjustment, our economy is more productive, with higher savings and investment and with more rapid growth at a sustainable current account level," he said.
Mbeki said the world was facing the prospect of stagflation - an environment characterised by low economic growth, increasing unemployment and high inflation - and a number of countries were taking firmer action to curb demand for commodities and to contain the inflation pressures.
2014 goals 'on track'
The Cabinet meeting noted that the country was on track towards achieving its medium-term goals of halving poverty and unemployment by 2014.
"Even though many challenges still need to be tackled attaining high and sustained economic growth is and will continue to be a key part of our strategy to achieving these medium term goals," Mbeki said.
According to a Development Indicators report released earlier this month by the Policy Co-ordination and Advisory Service unit in the Presidency, income growth among South Africans, combined with the expansion of social grants, had resulted in a rise in income among the poorest of the population since 2000.
The percentage of South Africans living on less than a 2007 benchmark of R462 a month had decreased from 58% in 2000 to 48% in 2005.
Taking population increases into account, the number of South Africans lifted out of poverty since 1996 had reached 9-million, the report found, with about 12-million now supported by one or more of the various forms of social grants provided by the government.
Source: BuaNews
