By THE INDEPENDENT UG
CAPE TOWN, SOUTH AFRICA | Xinhua | South Africa’s Finance Minister, Enoch Godongwana, announced that the country’s economy is estimated to have grown by 0.6 percent in the previous year and is expected to increase to 1.6 percent over the next three years. This revelation was made during the 2024 Budget Speech in Cape Town.
Godongwana acknowledged that South Africa’s near-term growth is constrained by lower commodity prices and structural limitations, despite an improved global outlook for 2024. The forecast for real GDP growth in 2023 was revised down to 0.6 percent from the 0.8 percent estimated in the 2023 Medium-Term Budget Policy Statement. The revision is attributed to weaker-than-expected outcomes in the third quarter of 2023, particularly in household consumption and fixed investment.
Looking ahead, Godongwana stated, “Between 2024 and 2026, growth is projected to average 1.6 percent.” The growth outlook is supported by expected easing of power cuts as new energy projects come online and lower inflation, which will support household consumption and credit extension.
However, the finance minister highlighted risks to the domestic outlook, including persistent constraints in electricity supply, freight rail, and ports, as well as high sovereign credit risk. He emphasized the need for faster economic growth to meet developmental needs.
Godongwana also mentioned that the budget deficit for the financial year 2023/2024 is estimated to worsen from 4 percent a year ago to 4.9 percent of GDP. The deficit is expected to begin improving from 2024/2025, reaching 3.3 percent of GDP by 2026/2027. The peak of debt is projected to be 75.3 percent of GDP in 2025/2026.
To address economic challenges and stimulate growth, the South African government has initiated a broad structural reform agenda, covering areas such as electricity, logistics, water, telecommunications, and visa reforms.
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