South African Finance Minister Pravin Gordhan said he’s disappointed by this week’s economic growth data as he had expected a weaker rand to help boost manufacturing.
“One would have expected with a significantly depreciated rand the manufacturing sector would be doing better at exports,” Gordhan said in an interview at the African Development Bank annual meeting in Marrakech, Morocco, yesterday. “Clearly demand from Europe which is still a dominant player is lower and making an impact on the manufacturing sector.”
Data published on May 28 showed the economy expanded by an annualized 0.9 percent in the first quarter, the slowest pace since a 2009 recession and below the most pessimistic forecast of 15 economists in a Bloomberg survey.
“The 0.9 percent is a disappointing number,” Gordhan said. “We would have been hoping for a better rebound from the mining sector because some of the difficulties from last year have been overcome.”
The rand has declined 13.6 percent against the dollar this year, the second worst performer of 16 major currencies tracked by Bloomberg, as labor unrest threatens to return to the mining sector. It gained 0.2 percent to 9.8070 per dollar by 8:40 a.m. in Johannesburg, after falling to a four-year low yesterday.
South Africa must speed up spending on infrastructure projects to boost the economy, Gordhan said. Government revenue collection is looking “far more optimistic” than expected.
“One quarter is not the basis on which you decide the rest of the year,” he said. “I am an optimist by nature, we will see what the rest of the quarters are like.”