The state of the economy: A crisis of employment

Abstract

In his ‘State of the Nation’ address in February, President Mbeki (2002) argued that macroeconomic stability had been achieved, the structure of the economy had changed for the better, and that the basis for sustainable growth and poverty alleviation had been laid. In several important respects, the State President is correct. After increasing sharply in the mid-1990s, the budget deficit and total national government debt has fallen as a percentage of gross domestic product (GDP) since 1996,1 South Africa’s export performance and balance of payments situation has improved, and inflation has dropped sharply.2 These trends are in what Finance Minister Trevor Manuel frequently refers to as South Africa’s ‘sound economic fundamentals’. Echoing Manuel, Mbeki concluded that ‘barring the exchange rate’ (which at the time had depreciated in real terms by about one-third since 1994), ‘all critical economic indicators have improved’ (2002: 11).