The Western Cape economy has outperformed the national economy as a whole, and is expected to continue to do so in the years ahead, Western Cape Finance Minister Alan Winde told the Provincial Legislature on Thursday.
“Between 2013 and 2018, the gross domestic product (GDP) of our region is expected to average 3.6% a year, compared with 3.3% a year at a national level.
“As in previous years, economic activity in our province will be supported by strong growth in the tertiary sectors, in particular, the finance, insurance, real estate and business services sector, which is expected to achieve an average of 4.6% growth over the next five years,” he said while tabling the 2013 Provincial Economic Review and Outlook and the Municipal Review and Outlook.
Winde held that the province’s transport, storage and communications sectors, as well as its tourism industry and related services, would also play a leading role in the charge for growth.
“The strongest growth of all, however, is expected to arise out of the construction sector, on the back of continued investment by government in key economic and social infrastructure initiatives. This is directly in line with our policy of driving infrastructure-led economic growth,” he commented.
Winde reported that, after a prolonged contraction, the province’s manufacturing sector was anticipated to perform better in the coming years, aided by the earlier-than-expected recovery of the Western Cape’s primary export markets.
In contrast, the agriculture sector, which suffered violent strike action last year, resulting in a considerable increase in the minimum wage for farm workers, was expected to show subdued growth, with a trend toward mechanisation becoming more evident.
“It is vital that we look toward the upskilling of employees in this sector to enable them to participate in more productive, higher-income-generating activities,” he said.
In addition, Winde believed that the province was unlikely to suffer the effects of the anticipated growth slowdown in the Chinese economy owing to the fact that it did not boast vast mineral resources, a primary South African export to emerging market economies.
“The weaker exchange rate could also play in our favour as its boosts exports from the Western Cape and tourism to our region,” he noted.
LABOUR MARKET DYNAMICS
The Minister further observed that, over the past year, several external factors, including the global recession, had affected the province’s ability to generate additional employment opportunities.
Almost 3.6-million people, or 60% of the Western Cape population, fell within the working ages of between 15 and 65 years, with over 25% of the Western Cape labour force unemployed.
“This presents us with several opportunities and challenges. With a larger number of potential workers that can contribute to the economy, if this growing workforce does not have the skills required by the economy, it is inevitable that unemployment, poverty and inequality will rise,” he commented.