CAPE TOWN, Jan 14 (Reuters) – Finance Minister Pravin Gordhan said on Thursday that South Africa’s economy would not slip into recession, rejecting predictions by some economists that sharp falls in the rand pointed to a contraction this year.
South Africa’s finance minister Pravin Gordhan
“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.
The rand, among the most volatile of major emerging market currencies, slumped to a record low of 17.9950 to the dollar during Asian trade on Monday on fears that China wanted to weaken its currency aggressively, though it has since recovered some ground.
The depreciation has, however, helped the export prospects of Africa’s most developed economy and, combined with a sharply lower global oil price, has helped to alleviate pressure on South Africa’s current account.
In 2010, Gordhan wrote a letter to then-Reserve Bank governor Gill Marcus asking the central bank to be mindful of employment and growth alongside its price stability and inflation mandate.
“We will certainly be meeting regularly with the Reserve Bank and look at the current environment to see how we approach challenges,” Gordhan said.
The National Treasury has set a growth target of 1.5 percent for 2015, though quarterly data have suggested this may be hard to achieve.
Markets don’t fall over Zuma’s remarks – Gordhan
By Jenni Evans, News24
Pretoria – Reacting to concerns that President Jacob Zuma’s public utterances are causing the rand’s slide, Finance Minister Pravin Gordhan told media on Thursday that the rand does not operate on what an individual does or says.
Speaking during a post-cabinet briefing, Gordhan said global markets are battling, with “flashes” like the sudden volatility of Monday, which made the rand fall to almost R18/$ at one point. It was trading at R16.55/$ at 12:00 on Thursday.
“The circumstances in which we find ourselves in are very complex,” he said in response to a question on whether the rand falls “every time President Jacob Zuma opens his mouth”.
“The world is in a terrible place,” he said. “The rand does not operate on what an individual does or says… but there are a wider set of factors that are at play.”
“You do not have to panic, you do not have to be anxious about our environment,” said Gordhan.
“I can assure you on behalf of government that I will do everything possible to stabilise our economy,” he said.
“South Africa is not going into a recession and is spending around R1.3trn every year,” he added. “The problem is that the economy is growing, but not fast enough enough.”
Minister in the Presidency Jeff Radebe said South Africa is in for a fraught time. “There are challenging circumstances ahead,” he said.
“Falling commodity prices and the reduced demand for exports because of difficult conditions, insufficient electricity supplies and the severe drought are just a few of the issues facing the country.
“South Africans have shown that they are resilient and know the value of working together and can work together,” he said.
Gordhan called on manufacturers to take advantage of the weakened rand by ramping up exports.
News24
