Innovation needed to grow economy

THE South African government and private the sector have to bring about changes to attract investment under current global economic conditions.

This was the call by Richard Downing, pictured, economist at the South African Chamber of Commerce and Industry (SACCI).

Yesterday Sacci released its Business Confidence for May, which showed a further decline of 1.5 index points to 92.8 from 96.3 in April.

In May the BCI was at its lowest since November 2002 when it stood at 92.1.

The BCI's highest level was 122.1 in December 2006 and its most recent low was 93.1 in March 2009.

The Sacci BCI gauges the mood in the business community on what it is doing in response to economic conditions.

This index uses 13 sub-indexes, which include manufacturing, exports, imports, vehicle sales, construction of buildings, share prices, inflation and the exchange rate.

"The domestic economy is not growing at a pace that businesses would like," Downing said.

"If you have a shop you are [either] not selling a lot or you are seeing a less number of clients."

Downing said businesses were not exporting at the desired level because of the decline in global demand.

"There are also issues of rules and regulations in the country that are hampering business expansion - for instance the labour laws."

Downing said the current debt crisis in Europe was severely affecting the country's export market.

"Countries are experiencing a decline in economic growth, so their demand for exported goods has also dipped."

While Downing would not predict another global recession, he said: "Europe might experience a recession if things carry on as they are."

He said South Africa might also experience a slowdown.

"Growth in South Africa is also declining - [currently it is standing at] about 2.1% and last year it was at 3.4%," he said.

"People must make sure that they are doing the right thing in their country." -