NATIONAL NEWS - The Democratic Alliance has called for a job summit in response to South Africa's shrinking GDP figure released on Tuesday, while Business Unity SA says it does not bode well for job creation.
South Africa's economy shrunk to a growth rate of 1.3 percent in the second quarter of 2011, Statistics SA said on Tuesday.
This was down from an increase of 4.5 percent in the first quarter, which was revised from 4.8 percent, Gerhardt Bouwer, acting executive manager at Statistics SA told reporters in Pretoria.
It was below market expectations with Bloomberg consensus predicting growth of 1.6 percent.
Economic activity in the manufacturing industry shrunk by seven percent while mining and quarrying shrunk by 4.2 percent.
Economic activity in the agriculture, forestry and fishing industry also reflected negative growth of 7.8 percent.
The largest contributor to the 1.3 percent growth rate was general government services (0.8 of a percentage point).
Unadjusted real GDP for the first six months of 2011 compared to the same period last year was 3.3 percent.
This figure did not reflect that the economy was dipping, said GDP manager at Stats SA Kedibone Mabaso.
DA MP Ian Ollis said during the same period that the economy slowed to a "glacial" 1.3 percent, the number of unemployed South Africans increased by 174,000.
"It is clear that our economy isn't working," he said in a statement.
Ollis planned to introduce a motion in the National Assembly on Tuesday calling for an urgent debate on the structural problems holding back economic growth and job creation, including an analysis of the contribution of labour laws.
"The biggest concern is our sliding manufacturing, mining, agriculture, forestry and fishing industries," he said, adding that these were the most jobs-intensive sectors in the economy.
"This helps to explain why our economy is failing to create jobs and why low-skilled workers, in particular, are struggling to find employment.
Busa said it was disappointed about the low growth.
"This far-less-than optimal growth performance was recorded -- even before the latest global financial volatility took place -- at a time when business data was already emerging that the economic recovery was losing momentum," the business body said in a statement.
"These trends do not augur well for employment creation."
Busa said South Africa needed to examine why key growth sectors in the economy, such as mining and manufacturing, were not more robust.
"Busa agrees with Finance Minister Pravin Gordhan that, while South Africa is well equipped to offset any new negative global factors, the basic challenge remains to address the structural elements that inhibit higher job-rich growth in South Africa, for which the New Growth Path (NGP) creates an opportunity."
Interest rates would need to stay low for longer, maybe well into 2012, Busa said, while predicting business conditions in the third quarter would probably remain subdued, especially given the global economic outlook.
Busa's economic policy committee would meet on September 9 and might well reduce its growth forecast of 3.4 percent for 2011.
In 2010, economic growth was 2.8 percent, while the economy contracted by 1.7 percent in 2009 when South Africa was in recession.
Source : Sapa
Posted on: 16:01 Tue, 30 August 2011
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