Witness Reporter
2 minute read
2 Oct 2008

Economy sound

Witness Reporter

With the United States facing an exceedingly grave financial crisis.

With the United States facing an exceedingly grave financial crisis and with a number of prominent banks in Britain and Europe against the wall, it is reassuring that the South African economy remains essentially stable. The Johannesburg Stock Exchange experienced on Monday what one commentator called "a violent day", indicating how quickly one part of the global economy can impact on another, but a trading resurgence occurred the following day.

Informed commentators have hastened to say that SA banks are in no danger of collapsing, as some significant banking institutions in the U.S. and in Europe have done. On the contrary, they are declared to be in a sound state, able to service loans and mortgages and to safeguard deposits and savings.

It is a tribute to the government of this country and to Minister of Finance Trevor Manuel in particular that the SA economy, although buffeted, remains essentially unscathed. It could easily have been otherwise, considering the political crisis in the ANC, which led to the "recall" of Thabo Mbeki and his subsequent resignation as the country’s president. Manuel also resigned — as he put it, as a matter of principle — but immediately made himself available to the incoming administration. Wisely, President Kgalema Motlanthe has retained him as Minister of Finance, indicating thereby that the current model for handling the economy will be maintained.

This model is by no means perfect and has enabled the huge enrichment of a few while failing to respond adequately to the abject poverty of many. On the other hand, it has begun to assist significantlyin the creation of jobs and has helped to develop the healthy ballast of a well-endowed middle class.

Although the growth rate will not, in the immediate future, reach the government’s projected aim of six percent, it is likely to remain steady at approximately half that percentage. In the long term, current policies are sound and, in the turbulent present, they bring relative stability to a nation dubbed globally as an emerging market.