South Africa's finance minister saysthe continent's largest economy is expected to have a slow recovery from theglobal economic crisis.
PravinGordhan says the crisis has had a significant impact on South Africa, as thenation's first recession in 17 years extended into the second quarter of theyear. Gordhan is predicting growth ofbetween two and a half and three and a half percent for the next few years.
DavidShapiro, a director at Sasfin Securities in Johannesburg, says a laggingrecovery is no surprise.
"Wewent into the so-called downturn behind everybody else and it's probable thatwe will come out of it behind everybody else," he says.
While?othernations were actually concentrating?on cutting back, I think we justlagged. So?you'll find that our interestrate cuts came a lot later. Our housingmarket is still under pressure. So Iwould expect this recession here to extend for a few more months," he says.
TheSouth African economy, he says, "relies heavily on what happens in the rest ofthe world" because it is mainly a commodity producer.
"Wehave to wait for the real demand for materials to take place. Not the financial demand, where we start tosee oil prices and commodity prices go up?. But I think we need to see real demand coming through as well," he says.
SouthAfrica's mining sector has also suffered because of the drop in demand forvarious minerals.
Shapirosays, "We've lowered interest rates and I think we're expecting that to kick inby yearend. We'll start to see spendingpick up and consumers feeling a little more comfortable about things."
Nonetheless,he says, it's" pretty serious for us because we have a very high level ofunemployment. The official rate is 23,24 percent. I think it's probably evenhigher than that."
Aneconomic growth rate of two and a half to three and a half percent may dolittle to improve the unemployment situation.
"Ifthat is the case, then I think we're going to have to make other arrangementsor we're going to have to look carefully at stimulating the economy andaddressing what is a very threatening issue, which is unemployment," he says.
South Africa is hosting the World Cupnext year. The soccer championship isconsidered the world's biggest sporting event. Shapiro thinks the nation's economy would be in worse shape if SouthAfrica had not been the host country. However, he says, overall, it's not been a big economic stimulus.
"Itwill give us a bit of a kicker. (But) interms of the amount of money that's being spent to get us up to speed in termsof stadiums and so on, it's not very huge relative to the overallinfrastructure package," he says.
TheWorld Cup-related construction has resulted in new roads and hotels, amongother projects.
Nevertheless,Shapiro says it'll take more than the World Cup to rev up the economy andcreate jobs.
"I think the government's battling alittle bit. In other words, it's notcoping and I think we need to formulate a plan here where we can actually bringin businessmen without any political agenda, who are not driven by money, whoare not driven by?promises of big contracts?but who can actually help theadministration," he says.