South Africa’s economic powerhouse Gauteng is forecast to grow by only 0.8% this year, said officials from the province’s Treasury department on Tuesday.
Despite the low growth rate, officials said the province is still outperforming the national economy’s growth which is projected at 0.5%.
This is according to Gauteng MEC of Finance Barbara Creecy, who presented the province’s medium-term budget policy statement to the Parliamentary portfolio committee on Tuesday.
“We are expecting the Gauteng economy to perform above the national economy,” said Creecy.
Economic growth in Gauteng has been falling in recent years, when considering the province’s previous mini budget announcements.
In last year’s mini budget, Gauteng officials expected the province’s gross domestic product to be 1.8% for 2015 and 2014.
Gauteng’s GDP growth was recorded at 3.3% in 2010 and 3.5% in 2011, according to the province’s 2015 medium-term budget policy statement.
But in her 2016 mini budget speech on Tuesday, Creecy spoke of headwinds facing the global economy.
These include that “global economic growth patterns have not stabilised from the 2008 financial crisis”, Africa’s economic growth is expected to fall to 1.4% this year and “low commodity prices and lack of diversity in many economies (which) deter investors”.
However, quarterly data indicates econmic activity in Gauteng is picking up.
Data from the second quarter also showed an improvement in growth to 2.9%, up from 0.1% reported in the first quarter.
The main drivers for this recovery were the manufacturing sector which recorded 8.1% growth, the finance and business sector (3.3% growth), the agriculture sector (3.2% growth) and transport (2.8% growth).
Given the low base from which the manufacturing and finance and business sectors grew, Creecy highlighted year-on-year growth for manufacturing at 2.6% and 2.7% for finance and business services.
The number of people employed by the province had grown to 5 million between 2010 and 2015. The top five sectors contributing to this growth include manufacturing, transport, finance as well as business services, and trade and community services.
“Those sectors last year contributed significantly to fact that we created a quarter of a million [250 000] jobs last year,” she said.
In the first two quarters of 2016, 47,000 net jobs were created in Gauteng, Creecy added.
Gauteng premier David Makhura is currently putting together sectoral committees involving business and government to find ways 11 key sectors can “unlock the potential” to drive the economy.
Small businesses also contribute to economic growth.
“About 45% of small businesses in the country are located in this province,” said Creecy.
Gauteng’s provincial government has committed to spending 30% of its goods and services budget on procuring goods and services from township suppliers.
The targeted spend of 18% was exceeded at the end of the second quarter and is currently at 23%, said Creecy. Spend is now over R6.8bn, as government has used over 1 600 township suppliers.
“Over last two-and-a-half years we have generated R13.5bn in revenue… I am satisfied with our own revenue generation, given the fact we are in tough economic times,” she said.