24 October 2018•Update: 31 October 2018
By Hassan Isilow
JOHANNESBURG
Africa’s most industrialized economy announced on Wednesday that its growth forecast for 2018 has been cut in half from 1.5 percent to 0.7 percent.
“Growth is expected to recover gradually to over 2 percent in 2021 as confidence returns and investment gathers pace,” Finance Minister Tito Mboweni said in his maiden Medium-Term Budget Policy statement.
South Africa’s Treasury had projected in February growth of 1.5 percent in 2018, rising to 2.1 percent in 2020.
However, it said today the economic outlook is weaker than earlier projected, citing low production in agriculture and mining and no new investments in the first quarter.
Mboweni, a former Reserve Bank governor appointed two weeks ago, said the government must choose a path that stabilizes and reduces the national debt.
“We cannot continue to borrow at this rate. We must choose to reduce the structural deficit‚ especially the consistently high growth in the real public sector wage bill,”
His statement has sown fear among some public sector workers that they might face a salary cut or retrenchments.
For the past decade, South Africa’s economic growth has stagnated, mainly due to a lack of policy certainty as well as recessions.
Newly elected President Cyril Ramaphosa has promised policy certainty to boost investor confidence and zero tolerance for corruption.
Mboweni said spending is projected at R5.9 trillion over the medium term, paying for grants, infrastructure development, funding to support industrialization, and human resources, among other sectors.
“Agriculture will be an important driver of our economic recovery. The Land Bank will continue to support emerging farmers,” he said.
