South Africa’s finance minister, Malusi Gigaba believes there are many possibilities for the country’s economy to grow.
That was his message after arriving in Washington Thursday to participate in the annual spring meetings of the International Monetary Fund and World Bank.
And despite the whisperings of economic policy changes down the road, Gigaba believes the focus will rather be on properly implementing existing policies that have been slow to deliver required dividends to the majority of South Africa.
With growth spurred by higher demand in China and a growing economy in the United States, South Africa could yet weather the economic clouds that have gathered, at least according to Gigaba.
“We’ve got the wind at our back, I don’t think that the world is up against us, there are challenges that every country faces, the world economy is not growing as fast as it should even though it is now on a growth trajectory, there are still risks in the outlook”.
Risks that include political and policy uncertainty with countries warned here not to shoot themselves in the foot.
“There are risks to the downsides including political uncertainty and we all remember the green shoots of 2011 which did not last very long. All countries should guard against what I have called the self-inflicted wounds,” according to IMF Managing Director Christine Lagarde.
While Minister Gigaba has maintained that government policy has not changed despite the cabinet reshuffle, with the ANC policy conference in June, could change come in the medium to long term?
“I don’t expect that there would be dramatic changes in the ANC policy, whatever policy changes that take place at the ANC policy conference and the national conference, are more likely to be in line with the policy decisions we’ve taken in the previous years. Remember the ANC has been much stronger in taking policy decisions than in implementing them, the biggest concern among many people in the ANC today and among many South Africans including the opposition, is the fast that those policies need to be accelerated, this is the biggest concern, this is what is going to be discussed and I think the national conference of the ANC is going to look at these things in a very sober manner.”
IMF’s South Africa Mission Chief Paulo Mauro believes its important people know how to work the market.
“If I am in my house and I see that the government comes and takes over the house of my neighbour, that doesn’t make me very inclined to invest in improving my own house, I think everybody understands that. On the other hand, if somebody increases the property tax on all the households in my neighbourhood, I may be a little upset because I have to pay a little bit more taxes - but that’s the kind of thing that people understand, and if it comes with better public services I would be willing to pay a somewhat higher property tax, so that’s just one silly example. But I do think that it illustrates the challenge, how do you restore equality in the country without creating an environment in which investor confidence; you don’t want to undermine that type of investor confidence, in fact you want to make sure that people know what the rules of the game are.”
More broadly, it was globalisation that loomed large here in Washington, in an era where trade policies have been questioned by powerful nations, including the United Kingdom and the United States.
“We also are very much aware of the fact that there are many who have not benefited from globalization who are very angry at the fact that they’ve not benefited. If you look at sort of what’s happened in the world in terms of lifting people out of poverty, China has had the strongest experience, lifting 800 million people out of poverty and that happened when it embraced the global market, when it opened itself up to competition, when it engaged more and more in trade," says World Bank President Jim Yong Kim.
Disputing the notion that increased global trade has resulted in a majority of people losing their jobs.
“A lot of people blame trade for the loss of jobs, for example in the United States. But if you ask the WTO, at most, at very most, only 20% of job loss is from trade and the vast majority if from automation, that’s what we’re seeing all over the world and so my message is that you’re not going to bring these old jobs back, every country in the world has to think about how it’s going to compete in the economy of the future.”
Issues of climate financing, structural reforms and re-skilling in an era of automation that will eliminate two-thirds of jobs over time, also on agenda here.
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