According to Treasury’s Medium Term Budget Policy Statement (MTBPS), which was released today, South Africa’s economy continues to grow in a weak global economic environment. According to the MTBPS, the global economy is undergoing a difficult adjustment to the extended period of weaker growth and increased volatility, ushered in by the financial crisis that began in 2008. A lengthy period of deleveraging in advanced economies is expected to act as a brake on growth, circumscribing trade and investment. These trends have resulted in a slowdown in developing economies – including China, India and Brazil. In this challenging environment, South Africa’s economy has, according to Treasury, displayed resilience and has continued to expand at a moderate pace. The National Treasury projects real GDP growth of 2.5% in 2012 – slightly lower than the 2.7% forecast in the 2012 Budget. Economic growth is expected to remain muted in 2013 at 3.0%, picking up to 3.8% in 2014 and 4.1% in 2015.
The macroeconomic and fiscal stability we have achieved since 1994 is a strong foundation on which to build
The MTBPS states that South Africa’s fiscal response to the 2009 recession was strong by international comparison. “This is reflected in the change in the budget balance. South Africa’s balance fell by about 6 per cent of GDP, from a budget surplus of 1.7% of GDP in 2007/08 to a deficit of 4.2% of GDP in 2011/12, reflecting strong spending growth in the face of lower revenue collection.” The macroeconomic and fiscal stability we have achieved since 1994 is a strong foundation on which to build Minister Gordhan today said: “The macroeconomic and fiscal stability we have achieved since 1994 is a strong foundation on which to build.” He stated that, as the global economy recovers, he expects to see South Africa’s growth improve over the next several years. Domestic growth is expected to be modest next year though, and to gather pace over the medium term. Yet much faster growth is required to stimulate the job creation South Africa needs, states the MTBPS. Gordhan’s foreword to the MTBPS states that while South Africa’s economy has demonstrated resilience in the face of strong global headwinds, the MTBPS is an attempt to reposition the economy and society as a whole. Gordhan says the MTBPS aims to reinforce the programme of action agreed to at the recent Presidential summit of government, labour, and business, which focuses on, amongst others, enhancing the labour relations systems, and igniting growth and job creation. Today Gordhan said: “Our deficit will be reduced over the period ahead, but ours is not a path of fiscal austerity. We will continue to expand infrastructure investment.”
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