Manuel’s recession optimism not shared by all

Economists and readers alike are slightly less optimistic than South African Finance Minister Trevor Manuel when it comes to talk of a recession in the country. “Can we avoid recession? I am still pretty confident we can,” said Manuel ahead of his departure to the World Economic Forum in Switzerland earlier this month. While he warned it would not all be sunshine and roses, Manuel said South Africa would in all probability continue to see its economy grow despite the global economic fiasco. “A recession is popularly defined as two quarters of decline and while it is possible that South Africa may avoid a recession, it is not likely that we will,” said Nedbank senior economist Dennis Dykes. “We are slightly less optimistic than the minister because we are sure to see more growth slowdown and if we do manage to avoid a recession we will have done well.” With the World Economic Forum under way in Switzerland, the impact of the sinking world economies has come to the forefront, with many international economists saying the impact is expected to be much worse than predicted. This is the view of Dykes who told FTW that much of South Africa’s economic future depended on how we reacted to world markets. “At this stage it is all about how deep and how long it is going to be and how we stand up to that. Of course the infrastructure spend ahead of 2010 in the country is very good as well as the spending on transport and electricity infrastructures, but there are sectors that are already feeling the pinch and are set to be affected even more.” This, he said, included the mining, manufacturing and motor vehicle sectors. “The other sectors are going to have a tough battle on their hands to make up the deficit. Much is also dependent on consumer spending which is expected to pick up with the petrol price decreasing and the interest rate coming down later in the year.” While readers agreed South Africa would manage the global economic crisis better than most countries, they were less sanguine. One of our readers commented that the country would manage better than most in the economic climate if Manuel got the auditor general’s office up and running efficiently and then enforced the findings of the auditor general and ensured that the relevant government people were held responsible for any irregularities found, and dealt with them accordingly.