SA economy ‘extremely buoyant’

JOHANNESBURG – South Africa’s economy remained “extremely buoyant” and the country’s current account gap is expected to ease slightly, finance minister Trevor Manuel said on Tuesday.

“The present economic environment is extremely buoyant. What started off as a consumer boom has been translated into rising investment,” Manuel said in a speech to a trade union federation.”Rising investment has led to employment growth, further contributing to rising consumption.We are capable of accelerating growth even further,” he added.Manuel said the pace of job creation in South Africa had risen to a point where employment is created faster than new entrants are joining the labour market but he said more work needed to be done to sustain the trend.Statistics South Africa said earlier on Tuesday the economy grew by 4,7 per cent in the third quarter of 2006 and revised upwards growth figures for previous quarters and the last three years.It said the economy expanded by 5,1 per cent in 2005 – its highest rate in more than two decades.The quarterly number was down on the previous three months but pointed to solid growth despite interest rate increases of 150 basis points in interest rates since June.Manuel in February cut his economic growth forecast for 2006 to 4,4 per cent.The South African finance minister said one cause of concern was that a significant part of the country’s imports was made up of imports and in future the quality of the current account deficit should be improved to investment goods.”Higher interest rates, faster public sector infrastructure spending, the moderately weaker currency and improved performance of our exporters should allow for a slight easing of the current account deficit.However, if we do not improve our export performance, our economic performance would not be sustainable, requiring a forced slowdown in growth to rebalance the economy,” Manuel said.The central bank has repeatedly warned a yawning current account shortfall of over six per cent of GDP poses a danger to the rand currency, down about 11 per cent against the US ollar so far this year.Nampa-ReutersWhat started off as a consumer boom has been translated into rising investment,” Manuel said in a speech to a trade union federation.”Rising investment has led to employment growth, further contributing to rising consumption.We are capable of accelerating growth even further,” he added.Manuel said the pace of job creation in South Africa had risen to a point where employment is created faster than new entrants are joining the labour market but he said more work needed to be done to sustain the trend.Statistics South Africa said earlier on Tuesday the economy grew by 4,7 per cent in the third quarter of 2006 and revised upwards growth figures for previous quarters and the last three years.It said the economy expanded by 5,1 per cent in 2005 – its highest rate in more than two decades.The quarterly number was down on the previous three months but pointed to solid growth despite interest rate increases of 150 basis points in interest rates since June.Manuel in February cut his economic growth forecast for 2006 to 4,4 per cent.The South African finance minister said one cause of concern was that a significant part of the country’s imports was made up of imports and in future the quality of the current account deficit should be improved to investment goods.”Higher interest rates, faster public sector infrastructure spending, the moderately weaker currency and improved performance of our exporters should allow for a slight easing of the current account deficit.However, if we do not improve our export performance, our economic performance would not be sustainable, requiring a forced slowdown in growth to rebalance the economy,” Manuel said.The central bank has repeatedly warned a yawning current account shortfall of over six per cent of GDP poses a danger to the rand currency, down about 11 per cent against the US ollar so far this year.Nampa-Reuters