World Bank predicts 2% growth in South African economy

GMT 04:47 2015 Tuesday ,18 August

Arab Today, arab today World Bank predicts 2% growth in South African economy

china yuan
Johannesburg - XINHUA

South Africa is expected to achieve a 2 percent growth in real Gross Domestic Product (GDP) this year, the World Bank said on Monday.

Releasing the 7th South Africa Economic update in

Pretoria, Catriona Purfield, World Bank lead economist for South Africa, said the forecast was based on domestic and international factors which include the slowdown in Chinese economy, the fall in commodity prices and some important domestic constraints.

The report says South Africa's real GDP growth should be 5.4 percent per year to allow per capita income to double and extreme poverty to be virtually eliminated by 2030.

For the projection to become a reality, South Africa has to make a policy shift in improving the education and skills development, Purfield said.

"We see that education is the greatest priority for South Africa if it is to harness its demographic opportunity to propel growth. Getting basic schooling right is the first step to ensuring that school leavers and graduates have the foundational skills necessary to function in the modern workplace," she said.

Purfield also emphasized that South Africa has to improve its basic education and post-school vocation training if it is to correct high unemployment.

One of the hindrances, she said, is high unemployment, especially among the youth.

"In other words, the school system is putting out school leavers who do not have the necessary education attainment levels at a time when the workforce and employers are demanding more skilled and higher educational attainment of new employees. There is clearly a mismatch,"she said.

Purfield said the country should also reduce youth

unemployment, promote manufacturing and increase exports by adopting policies to support the development of small and medium sized enterprises and informal firms.

She also called for reducing the red tape, promoting access to finance and ensuring greater flexibility in the regulations that apply to smaller enterprises.

Guangzhe Chen, the World Bank Country Director for South Africa said on the same occasion that the report would assist South Africa in coming up with the right policies and also stimulate debate in the country.

He said, "We hope that analysis and evidence offered in this report will promote informed dialogue and policy debate about the country's development priorities pertaining to job creation and economic inclusion in a context of major demographic changes."

The report also predicts an average growth rate of 4.2 percent in 2015 and 4.0 percent in 2016 for Sub-Saharan Africa.

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