The country's economy had been revised to grow at a rate of 0.5% in 2016, said Finance Minister Pravin Gordhan in his Medium Term Budget Policy Statement (MTBPS), tabled on Wednesday in Cape Town.
But Gordhan expected South Africa's economic growth to rise to 1.7% in 2017. “If we do the right things to support investment and confidence, our economic recovery will be more rapid,” he said.
Growth in different sectors
The National Treasury said growth in real output remained moderate in the first six months of the year compared with the same period in 2015.
Growth in the mining sector declined and the agricultural output weakened as a result of the drought.
In addition, growth in transport and telecommunications, as well as in electricity, gas and water, fell on weak demand. However, manufacturing output strengthened following a contraction in 2015, while finance, real estate and business services remained buoyant.
“To achieve the goal of economic transformation and build an equitable society, South Africa requires higher growth.
“Without decisive action, a protracted period of low growth will set back the country's ability to realise the constitutional vision to ‘improve the quality of life of all citizens and free the potential of each person.'”
Global and regional conditions
The National Treasury also said that the outlook for sub-Saharan Africa was marked by low commodity prices and falling export revenues, which had led to foreign currency shortages.
The 2016 growth forecast for the region has been revised down from 3% in April to 1.4%, with large economies such as Nigeria and Angola hard hit by low oil prices and disruptions in production.
“Slower growth in the region and global trade weakness limit South Africa's export potential.
“Greater economic integration with the rest of the continent would enable export-orientated South African firms to capitalise on stronger pockets of growth and increase their share of African trade.”
Its economic forecast, said the National Treasury, incorporated the outlook for 15 major trading partners, as presented in the October 2016 World Economic Outlook, published by the International Monetary Fund (IMF).
“Average growth of 4.1% is forecast for these economies in 2017.”
Meanwhile, the National Treasury said that over the short term, the United Kingdom's intention to leave the EU, South Africa's traditional trade partner, would remain a source of financial volatility, alongside concerns about the health of major European banks.
Brexit's long-term effects, including on South Africa, depended on timing and the nature of trade and investment treaties to be negotiated with the EU, it said.
Source: South African Government News Agency and SouthAfrica.info reporter
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