Data released by Statistics SA this week estimates that the economy shed nearly 70,000 jobs in the fourth quarter of 2012.
The SARB believes that by cutting interest rates, it can stimulate economic growth and job creation. The government believes that by spending more than it takes in through taxes and borrowing the shortfall, it can stimulate economic growth and investment, and create jobs. Government and the Reserve Bank and their cronies in the Manufacturing Circle believe that a weaker Rand can boost exports and stimulate growth and in turn, job creation.
But none of this has happened. In fact, exactly the opposite has happened. The Rand has been weakening since middle 2011. The economy ran a record wide trade deficit in 2012. Jobs were being shed late in 2012. GDP growth was slowing in late 2012.
What the South African economy needs in order for the general economy to truly recover and create sustainable jobs and growth are HIGHER interest rates, a STRONGER Rand, and a BALANCED government budget (at lower absolute levels of spending and taxing).
The sad reality is that the government will continue with exactly the same failed policies in an attempt to create jobs and growth, but this is what is currently destroying the economy. This is also what is destroying the UK economy at the moment, which I wrote about before here.