A study on the economic state of the City of Johannesburg’s (CoJ’s) economy has revealed lagging growth and a lack of diversification as the city struggled to return to pre-financial crisis growth levels.

The ‘CoJ Economic Overview 2013: A Review of the State of the Economy and other Key Indicators’, undertaken by the Human Sciences Research Council’s (HSRC’s) Economic Performance and Development (EPD) research unit, showed that, during the 2008/9 recession, South Africa and the CoJ both recorded negative growth rates of 1.3% and 1.5% respectively.

After experiencing “what appeared to be a modest recovery” post-2009, with growth levels reaching 3.4% and 3.7% in 2010 and 2011 respectively, forecast growth for the city for the next few years remained subdued.

The CoJ-commissioned report indicated the resumption of some growth in 2014, with an expected rate of 2.8%, which would quicken to growth rates of 4.2% and 5.2% in 2015 and 2016 respectively.

Although the city’s growth remained “relatively superior” to both the national and provincial levels, it had failed to grow its contribution to the Gauteng province’s growth beyond 48% and to the South African economy beyond 16%, HSRC EDP researcher Dr Selma Karuaihe said on Thursday.

However, presenting the findings of the study at HSRC’s headquarters in Pretoria, she said the city’s contribution to the national economy was so significant that the CoJ’s lackluster performance would have “significant implications” nationally.

HSRC chief researcher Stewart Ngandu said the growth of the country’s most populated city, which was home to more than four-million, had fallen short of the National Development Plan’s (NDP’s) targeted growth rate, which did not augur well for the Vision 2030 ambitions.

“The NDP estimates that for South Africa to achieve full employment, it needs to create about 11-million more jobs over the next 20 years, which required economic growth of 5.4% on average every year,” he explained.

This meant that the city needed to achieve the same growth that it experienced at the height of the commodity boom between 2004 and 2007, which saw growth levels peaking at 6.5%.

The findings of the study showed a lack of diversification of the city’s economy, which is concentrated around a few dominant sectors, such as finance, manufacturing, trade and community services.

“There appears to be a presence of growth constraints,” Ngandu commented.

Although the finance sector has experienced steady growth since 1996, this has been offset by the steady decline in the manufacturing sector, which was now declining faster than the growth of the skills-intensive financial sector, leaving the city unable to absorb low- to mid-skilled workers.

The city’s unemployment rate had increased to 25%, with youth unemployment estimated to be over 30%.

“It is critical for [the] CoJ to support and promote programmes that can facilitate improved economic activities and employment creation,” said Ngandu.