Cape Town - South Africa's potential for gross domestic product (GDP) growth could be stalled by several challenges, such as youth unemployment and labour strife, an economist warned.
“In South Africa, the potential for GDP growth could be negatively affected by the growing level of youth unemployment, lack of opportunities, social tensions and unrest in the labour market,” said Yves Zlotowski, Coface chief economist.
Zlotowski, who was speaking at a conference in Paris last week, warned that unrest could potentially spread into some key emerging markets.
This situation is being exacerbated where the middle class is voicing opposition to corruption and poor governance.
“A fully expanding middle class is more demanding in terms of law, anti-corruption measures, freedom and transparency. Political institutions in emerging countries are being challenged to adapt to this new situation.”
He pointed out that the slow pace of reform in emerging markets, infrastructure deficiencies and governments’ inability to respond to middle class expectations was problematic.
Despite these challenges, Coface sees significantly higher growth in certain emerging markets in 2013 compared to most established markets.
Zlotowski said that one of the factors contributing to growth in emerging markets is export trade openness.
Countries such as India, the Philippines, Indonesia, Thailand, Malaysia and Korea are touted to grow, while Russia, Turkey, Romania, Ukraine, Croatia and Hungary struggle to produce GDP growth above 4%.
Coface estimated China’s growth to rise to 8.5% in 2013, India’s growth to increase to 6.0%, a 5.2% growth for Sub-Saharan Africa, while Russia’s figures are estimated to fall to 3.0%.
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