CNN talks with South African Finance Minister, Pravin Gordan

JOHN DEFTERIOS, CNN INTERNATIONAL HOST: Well, South Africa is the powerhouse of Africa. It has enjoyed more than a decade of uninterrupted growth, but last year the wheels came off a bit. The International Monetary Fund, in fact, cut its growth forecast by a full percentage point to 2.5 percent saying South Africa is vulnerable to the downturn in Europe.

Pravin Gordan
Pravin Gordan

So how can the country protect itself from the overseas slide? Earlier I spoke to the South African finance minister Pravin Gordhan. He, too, had a chance to weigh in on the decoupling. We'll get his vote during out conversation.

PRAVIN GORDHAN, SOUTH AFRICAN FINANCE MINISTER: We'll have our own estimates on the 22nd of February, probably going to be a little bit higher. Our own reserve bank thinks it's about 2.8. But — so, let's say that the growth is certainly going to be below three percent as we go into 2012. Europe is a factor. Europe as a whole is a major trading partner for South Africa. And for the last 12 to 15 months has had a major impact on our manufacturing industry and other export sectors as well.

DEFTERIOS: From 2000 to 2007 you're suggesting average growth of five percent. So you're almost half of that average. What brings South Africa back up again? You had to spend a lot of money leading up to the World Cup on infrastructure, so you got a nice boost there, but what's coming in the bag of tricks? You have a February 9 state of the nation address from President Zuma. What can we expect?

GORDHAN: We certainly had, as you said, a wonderful World Cup. And the investment there played a big part in helping us to stabilize ourselves in the face of a (inaudible) session. We had a, if you like, (inaudible) banking system where the regulator and the regulatee processors work very well. And our banks were not that connected to the banks in the U.S. or Europe. So that was a plus factor.

We did lose a million jobs in South Africa as a result of the recession. And we haven't quite recovered from…

DEFTERIOS: That's a severe…

GORDHAN:…severe here. And that's on top of fairly high unemployment number, well above 20 percent as well. So that's — those are some of the challenges that we take on. So government has been hard at work to ask itself the question how do we not allow the global crisis to dampen all prospects of growth and employment in South Africa. And what is it that we could do that the president could announce on the 9th of February. And clearly issues like infrastructure and others are going to play a key part as we go forward.

DEFTERIOS: So sounds like another spending package.

Very quickly here, are you trying to shift to the fast growing economies of the world? China likes your natural resources, of course; India, the trading partner; Southeast Asia, to tilt away from the West?

GORDHAN: And of course African continent. It's not so much tilting away as much as widening the scope of our trading partners, taking advantage of the faster growing bigger emerging markets. And that's pretty much part of our strategy as we go into 2012.

DEFTERIOS: I don't want to ask you the big question for us for Global Exchanges, can you decouple — we heard about the year of the dragon in 2012 with the Lunar New Year, but the year of decoupling from emerging markets or not. We have a very simple choice here, shackled and tied to the developed economies of the world, or broken free? Can we actually say it's time for South Africa to break free from the developed world and grow on its own? Doesn't look like it yet?

GORDHAN: No. I think we pretty much are connected well. And that interconnectivity is something that we have to accept as part of the world now. The question is how shackled are we? And even if we are shackled, what is it that we could do differently in the coming years that will compensate for some of the difficulties that we see in parts of the world?

Post published in: Africa News

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