South Africa's economy will not slip into recession, Finance Minister Pravin Gordhan said on Thursday, countering predictions by some economists that sharp currency weakness pointed to a contraction this year.
“We are growing as an economy, we are not going into a recession. But we are not growing fast enough,” Gordhan told a media briefing after a Cabinet meeting.
It was reported that while South Africa’s economy narrowly avoided a recession in the third quarter, growth has been under pressure because of electricity shortages, weak global demand, plunging metal prices and drought.
The Reserve Bank projects the economy expanded 1.4% last year, the slowest pace since the 2009 recession. Bank of America Merrill Lynch on Monday cut its 2016 growth forecast by 1 percentage point to 0.4%.
Gordhan, who returned as finance minister in December, said he would be meeting with the central bank to discuss how to deal with the challenges of growth.
The Cape Chamber of Commerce and Industry is relieved to have Pravin Gordhan back as Minister of Finance but has voiced concerns.
“It is a relief to have Pravin Gordhan back in the job of Minister of Finance, but the question that remains to be answered is how much damage has already been done?” asks the Cape Chamber of Commerce and Industry.
“Whichever way we look at it, the world will see three Ministers of Finance in a week as a clear indication of a nation that does not where it is going or how to get there,” said Janine Myburgh, President of the Chamber.
Chamber said it was also clear that Gordhan was not back in his old job because of a sudden resurgence of wisdom in the Cabinet, but because of pressure from the people on social media, the sheer anger of people who have seen their life’s savings downgraded as well as the negative reaction of the market and the credit agencies.
Add to that the near unanimous views of economic experts who were bewildered by the sheer folly of the sudden firing of Nene.
“My big hope is that the tremendous outpouring of support for Nene and now for Gordon will give the right-thinking members of the Cabinet the courage to stand firm and resist being bullied into decisions that they know are not in the best interests of the country,” Myburgh said.