Govt pro­jec­tions un­der threat

The Star Early Edition - - NEWS -

THE 0.7 PER­CENT con­trac­tion in the Gross Do­mes­tic Prod­uct (GDP) in the first quar­ter of this year was worse than ex­pected and could jeop­ar­dise the gov­ern­ment’s pro­jec­tions of a 1.3 per­cent GDP growth, the Na­tional Trea­sury said yes­ter­day.

Sta­tis­tics South Africa yes­ter­day re­leased the GDP fig­ures which has seen the coun­try fall into a tech­ni­cal re­ces­sion, fol­low­ing a 0.3 per­cent drop in the last quar­ter of last year.

“This worse-than-ex­pected GDP out­come in­tro­duces sig­nif­i­cant down­ward bias to the GDP growth es­ti­mates that have been com­mu­ni­cated in the 2017 Bud­get Re­view, which pro­jected a 2017 GDP growth of 1.3 per­cent,” the Na­tional Trea­sury said.

But the de­part­ment said that de­spite the GDP con­trac­tion, the coun­try could still boost the eco­nomic growth out­look. per­for­mance was recorded be­fore two in­ter­na­tional rat­ings agen­cies down­graded South Africa’s for­eign cur­rency debt rat­ing to sub-in­vest­ment grade early in April, which has knocked con­fi­dence lev­els in the econ­omy fur­ther and are ex­pected to keep a ceil­ing on growth.

Kruger said the dis­mal out­come of the GDP in the first This could be achieved – among oth­ers – through the ben­e­fits from im­prov­ing global growth; the sta­bil­is­ing of com­mod­ity prices; more favourable climate con­di­tions; a re­li­able elec­tric­ity sup­ply in the coun­try, and less volatile labour re­la­tions.

“The cur­rent growth rate, if sus­tained, will lead to a fur­ther de­cline in GDP per capita and rev­enue, which will be risk­ing the sus­tain­abil­ity of our fis­cal frame­work and will – more im­por­tantly – be un­der­min­ing the de­liv­ery of so­cial ser­vices.

“The cur­rent state of the econ­omy puts more pres­sure on us as gov­ern­ment, busi­ness, labour and broader so­ci­ety to in­ten­sify our growth pro­gramme and im­prove con­fi­dence as a mat­ter of ur­gency to ar­rest the de­cline and set the econ­omy on a higher growth tra­jec­tory,” the de­part­ment said. – Siseko Njobeni quar­ter would push the coun­try’s GDP growth fore­cast for 2017 to a mere 0.5 per­cent.

“This is no­tably lower than South Africa’s po­ten­tial out­put, which the South African Re­serve Bank has es­ti­mated at 1.4 per­cent and far be­low what is needed to ad­dress South Africa’s grow­ing un­em­ploy­ment and soci al in­equal­ity prob­lems,” she said.

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