ECONOMISTS IN South Africa have dismissed finance minister Trevor Manuel’s forecast of economic growth, saying the economy has already been pulled into recession by the global financial crisis.

Falling production and massive job losses have hit all major sectors in the continent’s economic powerhouse, while the global climate has reduced exports.

Last week Mr Manuel, who is widely credited with rescuing South Africa’s crippled and debt-ridden economy in the aftermath of apartheid, said during his budget speech the economy would grow 1.2 per cent this year.

The predicted growth level is the lowest in over a decade – a period which routinely saw annual growth of over 5 per cent – and was revised downwards from a 3 per cent growth prediction last October.

Analysts believe the various sectors’ performances tell a different story, and that Mr Manuel’s forecast is far too optimistic and may have been politically motivated.

“There is a recession which is apparently masquerading as a growth slowdown, but should eventually be acknowledged for what it really is, even if this isn’t quite convenient going into a general election,” First National Bank chief economist Cees Bruggemans said.

According to Mr Bruggemans, sectors that made up 80 per cent of economic output had declined significantly over the past 12 months, with manufacturing output declining 7 per cent year-on-year in December.

One of the worst-hit industries has been car manufacturing, with vehicle sales last year down to 488,951 from a high of just under 650,000 in 2006.

To date General Motors South Africa has let go over 1,000 employees through a voluntary redundancy scheme, and Ford has shed over 800 staff.