Pretoria – Government says it will reach out to its social partners, particularly business and organised labour, to build consensus on the collective actions required to stabilise the economy and build confidence in the face of a weakened outlook for the global economy and its domestic consequences.
“Government will reach out to its social partners… to raise the level of investment and return South Africa to a path of inclusive economic growth,” Minister in the Presidency for Planning, Monitoring and Evaluation Jeff Radebe said on Thursday.
The Minister chaired a media briefing following a special Cabinet meeting that deliberated on the state of the economy and budget related matters.
Addressing the same briefing, Finance Minister Pravin Gordhan said the call to social partners was a way of consolidating the steps that needed to be taken to get the South African economy growing and moving in the right direction.
“As in all situations, it is best to find consensus because we need all our partners… to say what they can bring to be table to put South Africa in a better position so that all 55 million people can be beneficiaries of that process,” Minister Gordhan said.
As a commodity producer, the Minister said South Africa finds itself in a difficult position because when demand falls, this impacts the local economy.
“We are serious in our intent to bring all South Africans together to recognise the global market picture…” he said.
He said government was not taking the back seat and was working hard behind the scenes to ensure that they take South Africa’s economy in a different direction.
Government’s call to business comes amid market turmoil that has affected major developing countries and has put more pressure on capital flows and growth expectations.
The South Africa rand, which is among the most traded emerging market currencies, has been particularly hit hard in recent weeks.
Concerned about depressed trade volumes and turbulence in global capital markets, Minister Gordhan said this underscored the need to build resilience and for the country to act cautiously in the period ahead.
“The world finds itself in an extraordinarily difficult situation and it could last long… but… we are doing all we can to stabilise the economy,” said the Minister.
Minister Gordon said government continued to build on the country’s diverse economic structure, and export earnings continued to depend to a great extent on metals and semi processed raw materials.
Cabinet, he said, had also endorsed stronger measures to restore a sustainable fiscal path. Minister Gordhan is set to unveil the measures when he presents the national budget on 24 February.
“We are asking South African business to take advantage of the depreciating rand to export more to other countries,” Minister Gordhan said, pointing to huge opportunities on the African continent.
The deprecation of the rand offers much better prospects for export growth. This, combined with the lower global oil price, has helped relieve the pressure on the current account.
However, the weaker growth in South Africa’s major trading partners has meant subdued demand for South African products abroad.
Turning to the drought which has affected the rate farmers produce crops and livestock, Minister Gordon noted that not all parts of the country are affected by the drought.
“We will take the necessary stock of the situation in which we find ourselves. We take the drought situation as a top priority.”