By Aviwe Mtila
South Africa’s ailing economy takes a turn for the better with a GDP growth of 1 per cent for 2017, up from 0.7 per cent in October and forecasted to reach 2.1 per cent by 2020.
This is the word from South Africa’s Finance Minister, Malusi Gigaba, as he tabled the country’s 2018 budget on Wednesday in parliament. The minister attributes this to strong growth in agriculture, higher commodity prices and, in recent months, improving investor sentiment.
“We are anticipating growth of 1.5 per cent in 2018, rising to 2.1 per cent in 2020. While this is a good start, there are immediate policy interventions that we need to make to ensure that we create the right environment for investment, growth and employment,” says Gigaba.
South Africa has seen private investment contracting since 2015, mainly as a result of low levels of business and consumer confidence. Growth has remained stuck below 2 per cent and unemployment remaining high at 26.7 per cent.
In creating large numbers of jobs, build an inclusive and transformed economy and reduce inequality, experts say South Africa needs a strong, sustained expansion. In his speech, the Finance Minister says this will be possibly by raising the level of investment and improving the ease of doing business.
“South Africa needs to be bold and coordinated in building sectors where we have comparative advantage and can be truly world class. These include, but are not limited to: mining, agriculture, tourism, as well as manufacturing and service exports to the rest of Africa and globally,” says Gigaba.
Although global risk factors remain elevated, the world economy continues to provide a supportive platform for South Africa to expand trade and investment.
Budget 2018 notes that the world economic growth is at its highest level since 2014 and continues to gather pace. GDP growth is rising across all major economies. This will assist South Africa further in its growth trajectory says the Finance Minister.
“Investment opportunities are occasioned by the following global developments in our main trading partners: Stronger domestic demand in the US and the euro area has supported an improved growth outlook… The recovery in commodity prices has also supported developing countries growth prospects… sub-Saharan Africa is expected to grow at 3.3 per cent in 2018,” says Gigaba.