Monday, March 30, 2009

We won't be shielded from the global economic downturn - Manuel

Two months ago trevor said that we would not get a recession. Oops! The "cushion" South African finance minister Trevor Manuel is talking about is a 787 Billion Rand infrastructure program to upgrade our ports, rail airports and build new power stations. This will keep some people busy and make a few very rich but it doesn't create wealth: "you take from the people to give to the people".

March 30, 2009

(Reuters) - Finance Minister Trevor Manuel reiterated on Sunday that South Africa was not shielded from global economic woes but said it had sound macroeconomic policies in place to deal with the crisis.

Manuel told a public debate on economic policy that the country, grappling with unemployment of more than 20 percent, required microeconomic reforms to stimulate job creation and improve service delivery.

South Africa's economy contracted 1.8 percent in the fourth quarter of 2008 and indicators point to more weakness in the first quarter, possibly putting it on course for a recession as global demand cools and exports decrease.

But Manuel said Africa's economic powerhouse had measures in places to help cushion it against the worst of the downturn, including a 787 billion rand infrastructure programme to upgrade its road, rail and port systems and build new power stations.

"I don't believe we're going to be shielded from the global economic (downturn) but I think we must celebrate who we are, and be conscious of what we have achieved as a nation," he said.

"The big challenge in this country is that there are people without employment. The challenge for us is to confirm that there's no substitute for stable macroeconomic policy because that gives the best chance to deal with issues like job creation."

"I happen to be of the view that macroeconomic policy is very sound ... the jobs are going to come from microeconomic reforms."

Manuel said this week's summit in London of leaders from the world's 20 biggest economies should also focus on employment creation to offset the impact of the global crisis.

He lashed out at South African lobbyists, including the struggling auto sector, who he said were putting pressure on the government to offer rescue packages, without implementing reforms to help their own industries.

"Shouldn't they provide a stimulus by demonstrating the willingness to lead change in the industry before they say to the government, 'oh you've got to bail us out, look at the trouble we're in.'" Manuel said.

Manuel has previously criticised measures taken by some countries to handle the crisis and on Sunday cautioned governments against straining resources by doling out large sums of money in bailouts.

"I'm worried about the size of the stimulus packages in some countries, because I'm not sure quite sure that it's generating a retraction," he said.

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