Finance minister, Pravin Gordhan, presented the country’s medium term budget speech on Wednesday in Cape Town, where he reported that the country’s GDP growth projection was down 0.4 per cent from 2.5 per cent in 2012.
“In crafting our fiscal strategy for the next three years, cabinet has taken careful account of global and local economic circumstances. We now expect growth of about 2.1 per cent in the South African economy this year,” he said.
While global conditions played a role in South Africa’s economic slowdown, the decline was also largely due to domestic factors.
These included labour disputes, maintenance issues in major industries, constraints in electricity production and other areas and a decline business confidence.
“Over the past year, government has been working with business and labour in several sectors to build a better investment climate. Deputy president Motlanthe and Minister Shabangu responded quickly to allay concerns of investors in the mining industry. Ministers Shabangu and Oliphant have also made progress in resolving labour disputes in the sector,” said Gordhan.
“Minister Davies has engaged with senior executives and labour representatives to improve cooperation and restore confidence in the automotive sector. Constructive cooperation between government, business and organised labour also characterises the work of the task team on infrastructure, which aims to get these crucial projects moving.”
South Africa is currently in the midst of a global economic recovery and challenging domestic limitations. Gordhan however, maintained that GDP growth would recover over the next few years, with GDP growth projected at 3.5 per cent in 2016.
“Government remains committed to macroeconomic stability, supported by prudential fiscal management and sound monetary policy. We remain committed to counter-cyclical fiscal management and long-term sustainability,” he said.
According to the National Treasury’s Medium Term Budget Policy, the key to achieving sustainable growth and boosting job creation is centred on structural reform.
Improving education, increasing the competitiveness of local firms, enhancing the role of black economic empowerment initiatives, as well as the continued implementation of the National Development Plan (NDP) remain top of the priority list in the path to achieving inclusive growth.
“The central message of the National Development Plan is clear – to accelerate progress, deepen democracy and build a more inclusive society, South Africa must translate political emancipation into economic wellbeing for all. It’s up to South Africans to fix the future, starting today,” said Gordhan.