The upcoming Medium-Term Budget Policy Statement (MTBPS) could have good news for the direction of the South African economy. <\/p>\n\n\n\n
Finance Minister Enoch Godongwana will deliver the MTBPS on Wednesday, 30 October. <\/p>\n\n\n\n
Citadel\u00a0Chief Economist Maarten Ackerman said the improved political and energy stability could usher in some good tidings for weary South African consumers.<\/p>\n\n\n\n
\u201cCompared to the February budget, I do think that there is room for higher growth estimates, thanks to improved political stability following the formation of the new GNU as well as greater electricity production and less load shedding, and the recent interest rate cuts, which should bring some consumer relief,” said Ackerman. <\/p>\n\n\n\n
“We\u2019re also happy to see some investment spending to address the country\u2019s infrastructure issues.\u201d<\/p>\n\n\n\n
“Another factor that could have stimulated more economic growth since the elections is the emergence of a ‘more\u00a0business-focused GNU’.<\/p>\n\n\n\n
\u201cAs a result of that, the government is now in a position not only to focus on the populist checklist but to stick to fiscal austerity and get growth on track and the economy going\u201d.<\/p>\n\n\n\n
Citadel’s team sees economic growth rising to 1.5% plus over the next year, which would improve on the 0.7% seen in 2023 and the expected 1.0% for 2024. <\/p>\n\n\n\n
Citadel’s 2025 prediction is still lower than Investec’s 1.7% and the Bureau for Economic Research’s 2.2%. <\/p>\n\n\n\n
\u201cIf the economy strengthens, it implies that tax revenue can also increase,” said Ackerman. <\/p>\n\n\n\n
“One, however, needs to consider that in the year to date, revenue collection came under pressure, and the South African Revenue Service (SARS) did not collect as much as the Treasury had budgeted for in February.” <\/p>\n\n\n\n
“Lower revenue is one piece of potentially negative news we can expect to come out of the medium-term budget.” <\/p>\n\n\n\n