With most countries experiencing slower growth and undergoing more job cuts, South Africa stands out from the rest as joblessness is decreasing, which may help maintain the country’s economy and its subsequent exchange traded fund (ETF).
The unemployment rate in South Africa declined and the Labor Force Survey reports a drop to 21.9% in the fourth quarter from 23.2% in the third quarter of 2008, reports In the fourth quarter, South Africa’s GDP contracted for the first time in more than a decade.
An uptick in job creation is seen as a very slow and incremental build-up in their economy. Or, It could just be that the South African economy is lagging behind in feeling the full impact of the global economic woes.
In an effort to prop up struggling businesses, the South African government will help companies caught in “cyclical difficulties,” but the assistance will only be provided if companies are unable to get funds through banks, writes Nasreen Seria for Bloomberg. The ruling party has vowed to increase spending on social welfare and infrastructure to help reduce poverty and unemployment rates.
Automakers and mining companies already cut jobs as exports and commodities both declined. The potential government assistance will hopefully stem job losses that would otherwise reach a calculated 30,000 this year.
- iShares MSCI South Africa Index (EZA): down 11.5% in the last month; down 10.7% in the last three months
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