A lot of people were “terribly concerned” about South Africa’s future in the light of the current persistent labour unrest, and “quite rightly so”, said Econometrix chief economist Azar Jammine in Johannesburg on Friday. However, the situation was not as bad as it seemed.
 
In the longer term South Africa must address its structural problems, noted Jammine, such as income inequality and unemployment.
 
“But, for the medium term, I see us muddling along at 3% growth a year – not too exciting, but not a disaster. Believe it or not, South Africa’s trend of growth is the most stable in the world. We just keep on bubbling along at 3%.”
 
This said, though, Jammine signalled a warning that the country was “rapidly getting to crunch point to sort out its structural problems”.
 
Problems were numerous, such as an inadequacy in terms of education and skills development; an unfriendly labour market; and insufficient focus on small business as a job creator.
 
“Education scares me more than anything. Where are we going to get the skills to run the country? Unless we improve our education outcomes we will have a mass of people not skilled enough to command a job that pays enough to reduce the inequality we face. This is a huge challenge.”
 
However, again Jammine pointed to the success that had been achieved in expanding the black middle class in South Africa from 460 000 households to 3.26-million households in 2011.
 
Jammine also noted that it was necessary to break the influence the unions held in the labour market.
 
On the positive side, again, he emphasised that South Africa did have a plan to deal with all of its most pressing problems, through the newly developed National Development Plan (NPD).
 
However, he questioned whether it would have the necessary government support to be executed.
 
“[The NDP] goes to the heart of the structural problems.”
 
The NDP was drawn up under the leadership of Minister in the Presidency Trevor Manuel and his National Planning Commission.
 
Interest, Exchange Rates
Jammine did not expect to see any further interest rate cuts in the coming year, with an increase possible by the end of next year.
 
He also expected the rand to reach around R10 against the dollar by the end of 2014, which he said was not a “disaster by any means”.