Growth outlook bleak for SA
South Africa needs a wealth-creation mindset that encourages entrepreneurship - and fewer laws that restrict people who want to start a business, economist Mike Schussler said yesterday.
Schussler said that, because South Africa's major trading partner, the EU, is under economic stress, some of its members have reduced their imports from this country. There was little doubt, he said, that the effects of the austerity measures Greece and Spain, among others, were enduring would soon be felt in South Africa.
He said creating conditions conducive to entrepreneurship was something the government should do now. In the long term, it should remedy the ailing education system.
Those who hope that new markets for their products will open up in China, India, Brazil and Russia should lower their expectations because the Brics members are also facing economic challenges, he said.
The effects of the eurozone debt crisis were lasting longer than had been expected, he said, and might take years to be extinguished. World economic growth is likely to be below 3.5% this year and lower than 3.9% next year.
Global economic growth is in an extended period of below-normal expansion.
Though emerging markets seem to be growing quickly, their growth is far slower than previously, he cautioned.
South Africa's leading economic indicator has been negative for six months, proof that the slowdown is continuing.
Schussler said that GDP growth, excluding mining, was only 1.7% and that mining and manufacturing ran the risk of entering a downward phase because of the European recession.
He bemoaned the inability of the South African schooling system to produce world-class artisans and essential skills.
"The schooling of South African children is worse than that of their counterparts in most other African countries, who spend one-tenth of what South Africa spends on education per child. But children here remain undereducated," he said.
South Africans are asset rich and income poor, he pointed out. More than 70% of South Africans own immoveable property, even though the country has one of the highest unemployment rates in the world, with only four of every 10 adults employed, he said.
There is, however, a general lack of recognition that property is an asset, he said.
There is also the question of high levels of credit: "Even pensioners have credit," he said.
Schussler predicts that South Africa's GDP will grow by only 2.4% this year and will remain under 3% for next two years. He said inflation will be about 5.6% this year.
He was speaking at the Agricultural Outlook conference in Pretoria. - I-Net Bridge