Johannesburg - South Africa’s economic growth this year is
likely to miss the government’s current forecast of 2.7% as a slowdown in the
rest of the world hits exports from Africa’s biggest economy, Finance Minister
Pravin Gordhan said on Monday.
“We don’t know what the precise numbers are but certainly
the current indications are that growth is likely to be below 2.7%,” Gordhan
told Reuters on the sidelines of a conference in Johannesburg.
The central bank on Thursday surprisingly cut interest rates
by 50 basis points to 5.0% - its first move since the end of 2010 - citing a
weakening domestic and global outlook, and trimmed its own growth forecast to
2.7% from 2.9%.
It added that the risks to that projection were on the
downside if the economic stagnation in the eurozone, South Africa’s biggest
trading partner, intensified.
Gordhan welcomed the move by the bank, which was given a
slightly expanded mandate two years ago to take growth and unemployment into
account when setting policy, in addition to an inflation target of 3%-6%.
“It was a very appropriate move and a most welcomed one. In
2010, part of the variation of the mandate of the Reserve Bank was a request
that they take into account issues of employment and growth.”
Governor Gill Marcus won rare praise from labour unions for
lowering rates on Thursday, even though they complained it was “too little, too
Unions have long called for looser monetary policy and a
weaker currency to help create jobs in a country where official unemployment
runs at 25%.
Some have even demanded the bank be nationalised to change
its mandate from inflation-targeting to job creation.
“Clearly given the limitations in respect of fiscal policy
options currently, the Reserve Bank has done the absolutely correct thing in
line with central banks in many parts of the world,” Gordhan added.
South Africa slid into a recession in 2009 - its first since
the end of apartheid 15 years earlier - and the sputtering recovery may throw
up some problems for President Jacob Zuma as he seeks re-election as head of
the ruling ANC at the end of the year.