South Africa passing from rather dull growth

The South African economy is surviving rather in an inactive state and showed a very dull performance of just 2% this year and 3% in 2014- said by International Monetary Fund on Tuesday.  

When the nation is compared with the emerging markets, the growth was found relatively very low and the two main causes for this scenario were “Weak consumption and flat private investment”.

During an annual assessment of the South African economy, the IMF said that the SA prospects are moving downwards. It is exposed to many external risks coming from both the side i.e. the economies and the trading partners of the emerging markets.  

Most of the African economy is at the risk of capital outflow as developed nations especially the US Federal Reserve are now relaxing from their monetary policies. At the same time the economy is also exposed to the slow growth in Asia and possible drops in Europe.   

IMF also warned against the ongoing labour and social crisis which is negatively affecting the country’s economy.  

The country is regularly passing from the strike actions and protests due to the government’s poor delivery of the basic services, increasing gaps between the rich and poor.

South Africa is one of the country having the most unequal economies in the world.

According to IMF assessment, if we look at the unemployment rate, it is about 25% and is expected to increase in the near future. Currently near about 50 million citizens are jobless.

The labour markets needs to be altered and advised in favour of trade liberalization. Also there were some other recommendations from IMF which are likely to face strong opposition from powerful unions.

In response to this assessment by IMF, the Treasury said that the government was already aware that “it can no longer sustain in this ongoing economic situation to increase the growth and create job opportunities for the millions of unemployed youths.”

Treasury further said that Pretoria would work on domestic plans in order to grow the economy and create jobs. However more information will be released when the Finance Minister Pravin Gordhan will present his next budget  policy Statement later in this month.