Business Unity SA (Busa) has lowered its growth outlook for the country following the release of a World Bank report, the organisation said yesterday.
“Busa has also recently revised its outlook for growth to about 2.5 percent, compared with 2.7 percent a few months ago,” the body said.
“This weaker growth performance has been the outcome of both deteriorating global economic conditions as well as domestic constraints on growth. Growth in SA has lost momentum.”
The World Bank report, “Inequality of Opportunity in SA”, found that the circumstances a child was born into: ethnicity, location, gender, and family background, variably affected the child’s access to basic opportunities.
It found that in particular, location and ethnicity were important factors determining inequality in employment opportunities later in life.
Busa said it shared the concerns expressed by the World Bank about the risks to social and political stability in South Africa posed by high unemployment, huge income discrepancies and widespread poverty.
“While high youth unemployment is not unique to South Africa, it is clear again from the World Bank report that it is an especially acute problem in this country,” it said.
“It therefore remains urgent for all possible steps — including a youth wage subsidy — to be taken to alleviate the phenomena of youth unemployment.”
It said the key to higher growth and more jobs was to raise total fixed investment in both the private and public sectors.
“If SA wants to eventually reach a six percent growth rate, with all its benefits, then such a growth rate will need to be supported by total fixed investment of about 25 percent of GDP [gross domestic product] in the years ahead,” Busa said.