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South Africa stuck in low growth trap: Gordhan

REUTERS | 2016-07-26 12:08:15.0
Pravin Gordhan
Image by: GETTY IMAGES

South Africa's economy will avoid a recession in 2016 but remains in a low growth trap and is likely to see economic expansion forecasts revised lower, Finance Minister Pravin Gordhan said on Tuesday.

The Treasury's February estimate of 0.9 percent growth in 2016 was likely to change by the time of the October medium term budget, Gordhan told a media briefing on the sidelines of an investment summit.

Gordhan said he was concerned about the volatile labour market, which has been plagued by strikes and above inflation wage demands.

Gordhan told a bankers conference that he was however happy that the situation seemed to be stabilising.

Wage negotiations are taking place in the power, automotive and mining sectors, with initial demands ranging from 13 to 20 percent while inflation stands at 6.3 percent.

The central bank last week cut its growth forecast to zero percent for 2016.

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