Despite some "green" and "brown" shoots of economic recovery, major risks loomed "perilously large", South Africa's Minister in The Presidency responsible for Planning, Trevor Manuel, said on Friday.

Speaking in Parliament during a debate on President Jacob Zuma's State of the Nation Address, Manuel acknowledged that there had been some indicators of stabilisation over recent weeks.

But he also listed several risks, including: high levels of indebtedness of households and the rising interest burden of governments; the negative effects of governments having to reduce their debt burdens; and the fact that employment might continue to fall for some time even after economic output recovers.

"For South Africa, the growth forecast remains subject to the vagaries of the world economy and our own domestic risks," the Minister said, adding that, while inflation had reduced from its highs of 2008, oil prices and nominal wage pressures presented further risks.

Manuel, who until last month had been the world's longest-serving finance minister, said that the first quarter contraction in gross domestic product growth of 6,4% was "considerably worse than expected".

He predicted, however, that "somewhat better figures" would emerge in the latter part of the year, underpinned by sustained growth in public infrastructure, government consumption, better commodity prices, and the improving interest rate cycle.

In his February 11 Budget address, Manuel had forecast growth of 1,2% for the year, but government officials had since indicated that that target was out of reach, saying "zero per cent" would be acceptable in light of prevailing circumstances.

The global slowdown and the decline in commodity prices had negatively affected South African and other developing-country exporters. First-quarter manufacturing production had subsequently declined by an average of 14% in countries such as South Africa, Brazil, and Malaysia, while exports had typically dropped by about 25% in the first quarter.

Manuel's address followed that of his successor, Pravin Gordhan, who emphasised the need for continued fiscal prudence and warned that there "will be limitations to what we can spend", in light of falling tax revenues and higher borrowing costs.

Manuel, who is seen as an economic-policy conservative and something of a bulwark against any major leftward shift, indicated in his speech that there should indeed be a debate on economic policy.

However, he also emphasised the "inescapable" reality that "we [South Africa] have not been as badly affected as many other countries", owing to its macroeconomic discretion.

This theme was amplified by Gordhan, who said that South Africa was "fortunate" to be in a relatively strong fiscal position, with moderate public debt, and with a reserve bank that was in "good health".

The Finance Minister's statement was in subtle conflict with sentiments express earlier by the Congress of South African Trade Unions, a key government ally, which indicated dissatisfaction with central bank governor, Tito Mboweni.

In fact, the labour federation indicated that it would oppose any renewing of Mboweni's contract.