November 1. 1980 SOUTH AFRICA Roots of Black Poverty Moeletsi Mbeki THE long-awaited recovery of the South African economy has at last arrived, That was the verdict delivered by the South African Reserve Bank in its Annual Economic Report released at the end of August, The government has been working at stimulating the economy for some time, its chief stimulant being reductions in personal and corporate taxation, The objective was to encourage private consumption and an increase in private investment. At last these measures seem to be working though the outgoing Governor of the Reserve Bank, T W de Jongh, expressed reservation as to how long the boom would last. The Governor's concern is caused by two related factors; the surge in the rate of inflation to 14.8 per cent, and the dramatic decline of the current ac count surplus from R 7.210 million in the first quarter to R 770 million in the second quarter of 1980. These factors apart, real gross domestic product increased by as much as 8 per cent in the second half of 1979-80 compared to an increase of only 4.5 per cent in the first half. The growth rate of 8 per cent is the highest since South Africa went into recession in the early 1970s, Two forces are pulling the economy out of recession, The first and most widely publicised is the phenomenal increase in the prices of the metals South Africa sells abroad especially gold and platinum. Cold is currently trading at around $ 660 an ounce. Its average, price in 1977 was $ 148, climbing to $ 477 in 1978-79. This persistent upward trend in metals prices has left the mining houses, which are also substantial industrial investors, with a great deal of cash to dispense with. According to the Reserve Bank, corporate savings increased by R 800 mn in 1978; inn in the year ending June 1980. That
