The European debt crisis isn’t over and continues to threaten economic growth in South Africa, Finance Minister Pravin Gordhan said.
The crisis “clearly” hasn’t reach an end, Gordhan told reporters today in Johannesburg. “I admit we are not going to easily meet some of the targets we have set.”
Economic growth in Africa’s largest economy will slow this year as a recession in Europe reduces demand for manufactured goods from South Africa, Gordhan and Reserve Bank Governor Gill Marcus have said. Spanish bond yields rose to the highest in more than four months, raising concern that that nation’s borrowing costs may further threaten growth.
South Africa’s gross domestic product will expand 3 percent this year after growing 3.1 percent last year, Marcus said on March 29. The economy may expand more than the government’s estimate of 2.7 percent this year, Gordhan said on April 1, declining to give an estimate.
GDP is growing less than the 7 percent the government says is needed to slash the country’s 23.9 percent unemployment rate.
The government is reviewing unsecured lending by the largest lenders as an increase threatens to fuel inflation, Rene van Wyk, the nation’s registrar of banks, said in an interview March 15. Unsecured lending rose 53 percent to 101.1 billion rand ($12.7 billion) in the third quarter from a year earlier.
“There is significant growth in unsecured lending,” Gordhan said. “If that unsecured lending is feeding into consumption rather than into investment purposes for households and businesses, then that is worrying.”
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