National Treasury has revised down the South African economy\u2019s growth to 1.5% in 2019.<\/p>\n
In the 2019 Budget Review document on Wednesday, Treasury said Gross Domestic Product (GDP) has been revised down since the Medium Term Budget Policy Statement (MTBPS) tabled in October 2018.<\/p>\n
The document attributed the drop in forecast from the 1.7% tabled at the MTBPS to 1.5% – to a fragile recovery in employment and investment, and a less supportive global trade environment.<\/p>\n
\u201cThe weaker outlook projects a slow improvement in production and employment following poor investment growth in 2018, and a moderation in global trade and investment. The medium-term outlook is subdued, with GDP growth projected to reach 2.1% in 2021, supported by a gradual improvement in confidence, more effective public infrastructure spending, and a better commodity price outlook than previously assumed,\u201d noted the document.<\/p>\n
This as South Africa\u2019s GDP growth slowed from 1.3% in 2017 to an estimated 0.7% in 2018.<\/p>\n
The 2019 Budget revisions take into account weaker investment outcomes in 2018, a more fragile recovery in household income and slower export demand than expected due to moderating global growth.<\/p>\n
However all is not lost with positive signs that the economy has begun to gain lost ground.<\/p>\n
\u201cThe policy inertia and uncertainty that have constrained investment and confidence have begun to lift. The reconfiguration of Eskom is a major step in the broad reform of state owned companies. Several commissions are probing allegations of widespread corruption in the public and private sectors.\u201d<\/p>\n
This also went alongside President Cyril Ramaphosa\u2019s investment drive announced last year that yielded pledges of R300 billion in investment.<\/p>\n
Meanwhile, the Consumer Price Index (CPI) is expected to reach 5.2% in 2019 in response to rising food inflation associated with higher fuel and agricultural input prices. Electricity inflation is also expected to increase.<\/p>\n