National Treasury has revised South Africa\u2019s growth forecast for 2016 from 0.9% to 0.5% as part of its medium-term budget.<\/p>\n
Treasury said it further expects a moderate recovery over the next three years, with gross domestic product growth reaching 2.2% in 2019 amid less binding supply-side constraints, a recovery in the global economy and renewed business and consumer confidence.<\/p>\n
\u201cGrowth is expected to increase to 2.2% by 2019, supported by more reliable electricity supply, improved labour relations, low inflation, a recovery in business and consumer confidence, stabilising commodity prices and stronger global growth,\u201d said Treasury.<\/p>\n
\u201cDecisive measures to speed implementation of NDP (National Development Plan) reforms and reduce policy uncertainty can support accelerated and broad-based economic growth,\u201d said Treasury.<\/p>\n
However, current local growth constraints need to be overcome for the country to start setting its sights on 2.2% growth in 2019, Treasury explained.<\/p>\n
\u201cWhile global economic weakness plays a large role in South Africa\u2019s economic growth performance, domestic constraints stand in the way of investment, output and trade. The slow pace of finalising policy interventions in areas such as land reform, immigration, labour relations, mining and communications undermines confidence, which is a key determinant of economic activity,\u201d said Treasury in its statement.<\/p>\n
\u201cGovernment must demonstrate more rapid implementation to restore confidence and give hope to citizens,\u201d Treasury added.
\nBut South Africa must further tap its \u201cstrong institutions, stable macroeconomic environment, well-developed financial markets, relatively high levels of innovation capacity and strategic position in the region provide a solid platform for stronger growth\u201d.<\/p>\n
At a press briefing in Cape Town, Finance Minister Pravin Gordhan said that while South Africa is grappling with low or no growth, there are \u201cgreen shoots\u201d in the economy.<\/p>\n
\u201cThe economic environment is a challenging one but not impossible,\u201d he said at the briefing.<\/p>\n
\u201cWe are not in hopeless situation \u2013 it (growth) could get to 1.7% next year,\u201d he added.<\/p>\n
Gordhan said that trade-offs, such as reducing South Africa\u2019s public wage bill, would need to be met in a bid to reignite the economy.<\/p>\n
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