 Unemployment remains stubbornly high in South Africa |
South Africa needs to grow at almost twice its recent rate if it is to make a dent in its massive unemployment problem, according to investment bank Goldman Sachs. In a report on growth and unemployment, the bank warns that growth needs to reach some 5% a year if the official 30% unemployment rate is to come down.
South Africa's economy grew 3% last year, up from 2.8% the year before.
The figures are an improvement on the average of 2.7% a year since 1994, but still well off the threshold Goldman suggests.
Parallel market
Presenting the report, Carlos Teixeira, emerging markets economist for Goldman Sachs, said the government's policies were on the right lines, giving inflation targeting and trade liberalisation as examples.
But more needed to be done to encourage investment and increase the use of labour in the economy.
Like many African countries, South Africa has a huge informal economy running parallel to the official one, and Mr Teixeira said there were encouraging signs that job creation in the formal sector was beginning to pick up again.
But the gains were put at risk by the volatility of the rand, he said.
"Long term investors are concerned about the sudden, unpredictable fresh decline in the currency."
He said the remaining capital controls built into the economy may be partly to blame for the way the rand has rallied from 13.80 per US dollar - an all-time low touched in the closing weeks of 2002 - to about 7.40 now.
One-Minute World News 
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