Busa lowers economic growth forecast
 Business Unity South Africa (BUSA), an organisation which aims to ensure that organised business plays a constructive role, within the context of the country ’s economic growth, development and transformation goals on Friday 9 September, lowered its economic growth forecast from 3.4% to 3.1% for 2011.
According to BUSA, there are a number of new realities that need to be taken into account:
- Expected slowdown in the global economy to about 4% in 2011
- Risk of a double-dip recession
- Organisation for Economic Cooperation and Development recently cutting its growth forecasts for the US and Japanese economies
- Economic and financial challenges facing the eurozone economies
- Forecast in line with what many business economists are now indicating in light of new realities
Economic Growth and business conditions in the second and third quarters of 2011 have proven disappointing while strike action in various sectors, have had a roll to play. There have been disruptions in the production of fuel, chemicals and metals, while ongoing outages at key iron and steel plants, have all had a negative effect.
In addition, after showing a year-on-year growth of just 0.8% in June, manufacturing output fell by a sharp 6% month-on-month and 6% year-on-year in July.
BUSA said in a statement that the sluggish economic recovery also implied that interest rates would need to stay low for longer, probably into 2012, and a further cut in the repo rate may soon become necessary.
They further said that it remained important to generate productivity gains, implement structural reforms agreed to under the New Growth Path and build the necessary social and political consensus around reducing debt, if South Africa was to do better.
“Although the economic recovery is continuing, it is at a much more sluggish pace than originally anticipated,” BUSA concluded.
(Based on an article by Brindaveni Naidoo, engineeringnews.co.za)
Ernest Roper | Regional Manager Durban |
