Rand's Advance Against Euro Is Hurting South African Exports, Davies Says
South African Trade Minister Rob Davies said there is a “very widely held view” that the country needs a more competitive and stable currency, and a decline in the value of the euro is hurting exports.
“The issue is a real one and the debate is what we do about it,” Davies told reporters at press conference in Cape Town today ahead of the Fortune Global Forum. “I am not in a position to give you any detail of any likely responses.”
The rand has gained 12 percent against the euro this year after advancing 24 percent the year before.
Economic Development Minister Ebrahim Patel is leading efforts to devise “a new growth path” for South Africa, which aims to create more jobs and ensure wealth is more evenly distributed, Davies said.
In the February budget, the National Treasury said it expects the economy to grow 2.3 percent this year after contracting 1.8 percent last year. The growth forecast is likely to be raised when the mid-term budget is released in October, Finance Minister Pravin Gordhan said on May 11.
“Our growth performance is picking up,” Davies said. “It’s not what it needs to be. We need to produce much more labor absorption.”