BRIEF ANALYSIS

Statistics South Africa reported a disappointing GDP growth rate of 2.7% for the first quarter of 2012. With our job intensity of growth hovering around 0.5%, only about 199 500 new jobs can be expected at these growth rates. This is about one-tenth (10%) of the rate of new entrants into the job market.

Assuming that there are no job losses through redundancies, the net effect on employment levels will be 1.8 million more people unemployed by 2013.

With the number of unemployed currently at 6.6 million (correct definition), this will cause unemployment levels to rise to 8.4 million people (38%) – adjusted for higher EAP levels. Hopefully, the impact will be muted by the various public sector expenditure programs, lead by Transnet’s R300bn capital expenditure program.

With the political climate being what it is, there is little hope that the public sector expenditure will be rolled out efficiently and effectively. This will affect service delivery and infrastructure rollout, which will affect businesses. Overall, the current level of growth does not bode well for South Africa’s ambition of creating 5 million jobs in 10 years, as articulated in the National Growth Path.

Also with deepening EU woes, our largest trading bloc, we can expect a slowdown in exports (demand side) and as such, worsening terms of trade. We are headed towards incredibly tumultuous times with a weakening currency, a higher trade deficit, a higher budget deficit and expansive social welfare commitments.

No respite in site, brace yourself!