South Africaâ€™s Reserve Bank Governor, Tito Mboweni, said the country can maintain its growth rate. However he added that price stability would not be without its challenges.
Mboweni said on Wednesday that inflation threats are due to higher than expected producer prices, local consumption spending and high global oil prices.
These developments demand vigilance on the part of the Bank if the hard-fought economic gains are to be sustained, Mboweni said on Friday at a fundraising event in Johannesburg.
Mboweni said that in order for unemployment and poverty levels to be halved by 2014, the government needs to reach an annual growth rate of 4.5 percent of higher between 2005 and 2009 an average growth rate of at least 6.0 percent between 2010 and 2014.
South Africaâ€™s unemployment rate stood at 26.7 percent in September of last year, according to Statistics SA.
According to Mboweni, growth rates had averaged 4.5 percent and 4.9 percent in 2004 and 2005 respectively, and growth is expected to exceed 4.0 percent this year.
There are strong indications that the South African economy has reached a higher growth path. The growth rate averaged 3.0 percent per annum between 1994 and 2003 as compared to 1.0 percent during the decade preceding the country's advent to democracy, he said.
Mboweni warned that the maintenance of the countryâ€™s price stability was not without its challenges.
Mboweni said that both global and local risks could pose threats to the economy.
The globalization of the South African economy is well documented. There is no escaping the impact of global influences on the SA economy. As is the case internationally, the high oil price, if sustained, poses a significant threat to inflation and economic growth in South Africa. There are domestically generated risks to the inflation outlook as well. he said
He went on to add that the government had acknowledged the shortage of skilled labor as an issue to be solved for increased economic growth levels.
Both government and the private sector have an important role to play in meeting the skills shortage of the economy, said Mboweni.