“Developments in the United States economy have led to a rapid depreciation in the emerging market currencies, including the rand,” said Zuma in his State of the Nation address on Thursday.
“During the course of 2013, the rand depreciated by 17.6 per cent against the US dollar. The weaker exchange rate poses a significant risk to inflation and will also make our infrastructure programme more expensive.”
South Africa’ economy, along with other emerging market economies, have had dwindled growth projections, and have struggled to keep currency exchange rates strong since the tapering announcement from the US Federal Reserve.
Severe labour unrest since early 2013 resulted in the steady plummeting of the rand, which now sits at the 11 rand range to the dollar.
South Africa’s mining industry production has also been on the downhill, with major platinum and gold producers reporting muted results and outlooks.
Wage negotiations between companies and worker unions Association of mineworkers and construction union and the National Union of Mineworkers, despite many breakdowns, still continue at length.
Analysts had however predicted that despite the rand’s weakness, it would only plunge to just over 9.30 to the dollar by the end of last year.
“While we have these difficulties, we know that we can cope with this period of turbulence. We have done so before in the past five years. We will, in fact, emerge stronger if we do the right things,” said Zuma.
The country’s unemployment rate was another major focus of the address, as youth unemployment rates continued to grow in spite of 3.7 million work opportunities reportedly created over the past five years.
The country’s unemployment rate was recorded at 24.1 per cent in the fourth quarter of 2013, which originally stood at its highest in that year at 25.6 per cent in the second quarter.
The unemployment rate had therefore been on a slowdown from the third quarter onward.
“There are now 15 million people with jobs in the country, the highest ever in our history, and over 650 thousand jobs were created last year, according to Stats SA. This is still not good enough,” Zuma explained.
“The unemployment rate still remains high. Youth unemployment in South Africa continues to be of concern, as it is throughout the world.”
The introduction of the Employment Tax Incentive Act is however expected to further drive the unemployment rate slowdown and minimise youth unemployment.
The Act will encourage private companies to hire more young workers by providing a tax incentive to employers.
“Our country still faces the triple challenge of poverty, inequality and unemployment, which we continue to grapple with. Dealing with these challenges has become a central focus of all democratic administrations,” said Zuma.