The prevailing global economic jitters call for “effective political leadership and decision-making” if the world’s economies are to survive without further damage, said Business Unity SA (BUSA) deputy CEO Raymond Parsons.
Addressing the Afrikaanse Handelsinstituut Annual Congress in Pretoria, Parsons said the forthcoming G20 meeting would be critical in this respect.
Speaking to the local economic environment, he said “The fact that South Africa is engaged in the new Growth Path process at present is of help in defining current and future responses to the latest global economic crisis”.
“Given the economic uncertainties in the global economy, which could take several years to unwind, it remains essential for an emerging market like South Africa to be able to devise flexible responses to address the cyclical and structural challenges that exist,” he said. The growth plan provided a useful framework and focus for what to do next.
He said the global economic recovery had been hit by a number of shocks in 2011 and these would also require the crafting of skillful policies globally if a ‘worst case’ scenario was to be avoided.
Parsons said that key global policymakers needed to see what elements of hope could be discerned amidst the ‘doom and gloom’ and offer strong leadership. He said one of the major factors contributing to depressing the economic and business mood globally was the perception that political will and leadership in key economies like the US and the Eurozone countries had not yet shown themselves equal to the new economic challenges facing them. “The remarkable capacity of the global system to take severe punishment is the best reason for hoping that we will still have time to rally the constructive forces of the world to avoid a ‘double-dip’ recession,” said Mr Parsons, “provided there is effective political leadership and decision-making.
Parsons added that economic circumstances had changed since the NGP was launched a year ago. He also noted that government, labour and business had collaborated in producing the ‘Framework for SA’s response to the International Economic Crisis’ in February 2009. He said this country would not escape the impact of the recent turn of events in the global economy. BUSA recently reduced its forecast of real economic growth from 3.4% to 3.1% for 2011 as a whole – but as an emerging economy SA still had a margin of resilience.
Mr Parsons said that, nonetheless, if the NGP and related policies wanted to make the SA economy bigger, stronger and better in the period ahead, their approach needed toiIncrease the actual and potential real economic growth rate to higher levels over time, such as to 6% – 7% per year. It must shape and implement policies and prospects that would promote higher job-rich economic growth, especially among the youth.
He said that, given present economic circumstances, the way ahead economically for SA should be based on the following six points of departure –
“If we want to stem current job losses as well as lay foundations for future job creation in SA, then we must concentrate largely on the factors which can make a difference locally, rather than agitate endlessly about overseas trends over which we can exercise little influence. The Medium Term Expenditure Budgetary Framework next month should reinforce this message”, said Parsons.