JOHANNESBURG, Aug 21 (Reuters) - South Africa is unlikely to make a significant dent on its high level of unemployment even if the economy manages to grow at higher rates, Reserve Bank Governor Gill Marcus said on Tuesday.
Speaking at a fundraising dinner, Marcus said the bank had been cutting its growth forecasts for the past year with GDP growth now expected to average about 2.7 percent this year and 3.8 percent in 2013. The challenges facing the domestic economy, partly due to the global downturn, were “daunting”, she said.
“Even if we manage to grow at higher levels, it will be difficult to absorb such vast numbers of unemployed, especially in the short to medium term,” Marcus said.
President Jacob Zuma has singled out one of South Africa’s biggest challenges as the jobless rate which has persisted around 25 percent for the past year and was at 24.9 percent in the second quarter, according to the latest official statistics.
“The natural rate of unemployment in South Africa appears to be in excess of 20 percent, and significant structural changes will be required in order to make inroads into this,” Marcus said.
South Africa’s potential output growth had declined to 3.5 percent from 4.5 percent before the global economic slowdown and would be further constrained by domestic factors such as electricity shortages until next year, she said.
Last week’s crackdown against protesting Lonmin Plc miners that left more than 40 dead has put the focus on South Africa’s unemployment and its growing black underclass, often uneducated and underpaid, that has seen few benefits from the end of apartheid nearly two decades ago.
It has also raised hard questions about investing in Africa’s top economy and the ruling ANC’s ability to deliver on overdue promises of job creation and change.