Question

In 2016 SA s economic growth rate was only 0.3% which is far too low if the country is to more successfully meet the key challenges of unemployment,poverty and inequality.Is the SA economy in a low growth trap?What can and should be done by government, business and labour to turn the economic fortunes of the country around?Make specific reference in your answer to the significance of the National Development Programme ,the importance of policy certainty and the role of investor confidence in achieving better outcomes for all South Africans.

Answer 1

PAGE No-01 Ans: Yes, the south Africa's economy is still in low growen trop. The steep decline in South Africa's business confidence on a set back to economic growen recovery and will dampen Investment, rating ent rating agency agency Moody's said after Africa's most industrialized economy slumped to recession. South African business confidence fell in the second quarter to a level not seen since the 2009 necession , a survey showed best week, as concerns over politics weighed, Reuters reported. Reduced business confidence implice reduced investment, which would negatively affect growth in South Africa's already - weak economy, and will ultimately make fiscal Consolidation more challenging." South Africa entered recession for the first time in eight years in the fast quarter data showed on June 6, putting pressure on the government just as it must cope with credit downgrader. Following are the some importout measures taken by the South Africa's the economic government business and Labour to turn into boosting phase : These points are basically by the Great economist "Andrew Donaldson", who retired from the treasury and key post holder in National Development Programme Broadening credit extention Financial deepening the diversification of enterprise funding and real Growth in i a POTO →

PAGE.NO:-0% ű private sector credit extention are enabling condition for investment and economic growth Public sector borrowing has grown rapidly over the past decade , but private sector investment and a borrowing have been sluggish. As interest rates rise over the period ahead, it is important that offsetting measures be adopted to ensure the credit conditions improve stronger growth in public and private sector financing cannot be expected to arise spontaneously in the presence of regulatory uncertainty or pessimism about growen prospects. I A competitive exchange rate & Export-oriented manufacturing, tourism and trade in services are importout growth drivers, but they cannot drive if the exchange rate is highly volatile and over- valued. The present policy stance on the exchange rate is confused It appears to assume that be cause a weak rand cannot be delended in the presence of adverse sentiments, it is also impossible to counter unwanted rand strength. It is, of course, impossible to stabilise" the rand real terms, but it doesn't follow that its value should be left entirely to the vicissitudes of the market Fiscal Consolidation : - Fiscal Consolidation has three broad aspects: expenditure management and revenue strengthening , dest Containment and restructing of state assets. Government expenditure to rise as a share of GDP and the scope for raising the overall tax burden is limited. These are not cucumstancle in which substantial medium-term shifts in the structure of expenditure are possible- moderation and effective epending controls are needed everywhere G

PAGE . No:-03 • Investment in housing :- Alongside economic and community investment in cities, a substantial increase in housing investment is needed There is an ongoing role for government - sponsored housing schemer and upgrading of informal settlements ut greater emphasis must be given to private investment in housing stock be part of Urban densification initiatives and to contribute to affordable improved residential neighbourhoods. Modernise network industries: - Power, transport, water and communication are network industries in which public regulation and licensing are necessary, but there are many possible blends of polstic and private ownership of infrastructure and services. South Africas has historically relied on state owned, integrated utilities to maintain these infrastructure networks and secure the supply of network services ... - CONCLUSION: The above recommendations help in national development and also build up the investor confidence which ultimately leads towards better economica outcomes fall all South Africane. WAR