WITH high unemployment and a low growth rate, the economy has found itself in a "deadlock", which could lead to an economic crisis if the government does not start addressing the country's challenges.
This is according to economists who addressed investors at the Old Mutual Investment Group South Africa (Omigsa) event at the Radisson Blu in Port Elizabeth yesterday.
Omigsa chief economist Rian le Roux labelled 2013 as a watershed year for the South African economy as investors grappled with a number of concerns including the country's slow growth rate, unemployment, big deficits and social and political instability.
He said the country had a 37% unemployment rate, if one took into account those who had given up searching for jobs. "This is not sustainable and will end up in a crisis."
On the deficit front, South Africa was buckling under a rapidly widening gap between imports and exports. "We are importing way more than we are exporting. Currently there is an annual R24-billion deficit. We need to plug that gap."
The budget deficit also painted a gloomy picture with massive spending on wages, grants and interest on public debt. "We need to constrain government spending."
Violent protests like Marikana, De Doorns and Sasolburg had also given investor confidence a major knock. "This is a dangerous combination for investors," Le Roux said. To pull South Africa out of its economic deadlock, Le Roux said policy direction and less government meddling in the economy was paramount.
"But, judging by the state of the nation address, we can expect even more meddling."
He said employment, education, corruption and infrastructure backlogs also needed urgent attention to improve the country's growth rate, which was expected to be between 2% and 3% this year.
Le Roux was positive these problems could be "fixed".
"The National Development Plan spells out what is wrong and it spells outwhat needs to be done.
"All we need is energised politicians to implement it."
