South Africa will likely lag behind the economic recovery and increasing optimism in other countries, Finance Minister Pravin Gordhan said today.
He said at the financial results presentation for the state-owned Land Bank there was building talk across the world of the beginnings of a recovery.
“We are at a time when there is a lot of talk about green shoots and the possibility of the recession having bottomed out, and are seeing the very beginnings of some optimism in the world about the economy.”
“Of course in South Africa, we are at a point where that optimism will come with a bit of a lag, as with the recession itself.”
The central bank last week surprised by cutting the repo rate by 50 basis points to 7.0 % on worries that South Africa’s first recession in 17 years was going to be deeper than previously thought.
Reserve Bank Governor Tito Mboweni said while the global economy appeared to have improved, the recovery would not be uniform across all countries and South Africa lagged the international trend.
The central bank’s rate move took cuts since December to 500 basis points, totally unwinding interest rate increases between June 2006 and June 2008.
South Africa will release its second quarter economic growth data on Tuesday. A Reuters poll last week showed GDP was seen falling by an annualised 3.2 %compared with the first quarter’s 6.4 % decline.
Pic: Unemployment in South Africa