Sept. 1 (Bloomberg) -- South Africa must “use our elbows” to remain competitive as its economic recovery loses momentum, Finance Minister Pravin Gordhan said.
Africa’s largest economy isn’t growing as fast as other members of the so-called BRICS grouping, which also includes Brazil, Russia, India and China, and must become more competitive to boost exports, Gordhan said in a speech to accountants in Johannesburg today.
“South Africa is falling behind,” he said. “In the BRICS company we’re going to be elbowed. Unless we have the critical mass to use our elbows, we’re going to find competition tough.”
Growth in the South African economy slowed to an annualized 1.3 percent pace in the second quarter from a revised 4.5 percent in the first, the statistics office said on Aug. 30. A slump in Europe, which buys about a third of South Africa’s manufactured goods, cut factory output, and mining production contracted. The data has added to expectations the central bank will keep its benchmark interest rate at a 30-year low of 5.5 percent and possibly reduce it this year.
Inflation accelerated to 5.3 percent in July from 5 percent in the previous month, staying inside the Reserve Bank’s target range of 3 percent to 6 percent.
It will take two to three years for South Africa’s economy to return to its 2008 size, Gordhan said. The pace of growth has been “slow” over the last two years, he said.
The global crisis has accelerated a shift in the world economy, to the benefit of emerging economies whose exports are soaring, Gordhan said. “It’s now clear that the shape of the global economy has been profoundly altered,” he said.
The rand weakened to 0.2 percent to 7.0042 per dollar as of 9:40 p.m. in Johannesburg.
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