Low Levels of Economic Growth Threaten Employment Creation

SOUTH AFRICA - Report 31 Aug 2015 by Iraj Abedian

During his budget speech at the beginning of the year, the Minister of Finance estimated growth for 2015 at 2%. For the economy to grow at an average rate of 2% in 2015 it would have to grow at relatively high rates in the second half of the year because growth in the first half was disappointing. The quarter-on-quarter (q/q) seasonally adjusted annualized real GDP growth rate was a disappointing -1.3% in the second quarter of 2015 (this following an already low growth rate of 1.3% in the first quarter) (see Graph 1).Graph 1 depicts the growth rate in the quarter-on-quarter seasonally adjusted annualized real GDP for the past three years and it shows that during this period, growth rates have been negative twice, in the previous quarter (Q2 2015) as well as in Q1 2014, with the growth rate only surpassing 5% in Q4 2014. This is a worrying development considering the country’s dire socioeconomic problems, such as high unemployment and poverty rates, which depend on economic growth being high enough for the country to be able to solve the problems.

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