Policy stability key to improving growth
Translating the cyclical upturn and improved sentiment into rapid growth requires the government to finalise outstanding policy and administrative reforms, particularly in sectors with high growth potential, according to the Budget Review.
Translating the cyclical upturn and improved sentiment into rapid growth requires the government to finalise outstanding policy and administrative reforms, particularly in sectors with high growth potential, according to the Budget Review.
This would include the mining sector policies that support investment and transformation; telecommunications reforms, including the release of additional broadband spectrum; lowering barriers to entry by addressing anticompetitive practices; supporting labourintensive sectors such as agriculture and tourism; and increasing skills levels across the economy.
The Treasury estimates that, if the international environment remains supportive, effective implementation of these reforms could add two or three percentage points to real gross domestic product (GDP) growth over the coming decade. The Treasury projects real GDP growth of 1.5% in 2018, 1.8% in 2019, and 2.1% in 2020.
It said growth had been constrained by declining private investment associated with political and policy uncertainty, and low business and consumer confidence. Investment by the private sector contracted in 2015, and the deterioration continued into 2016 and 2017.
Finance Minister Malusi Gigaba announced a detailed, 14-point action plan in 2017, which aimed to bolster SA’s struggling the economy.
“There has been marked progress on the 14 confidenceboosting measures announced by the minister of finance in July 2017,” the Budget Review says.
“These measures were intended as short-term interventions to complement the structural reform agenda set out in the National Development Plan,” it says.
Over the period ahead, the government will build a social compact in partnership with business and labour to strengthen the economic recovery. This will include intensifying collaboration with the private sector, through platforms such as the CEO Initiative.
THE 2018-19 BUDGET ACCELERATES THE GOVERNMENT’S EFFORTS TO NARROW THE BUDGET DEFICIT
As part of its policy commitment to accelerate economic growth in cities, the government will introduce regulatory reforms in 2018 to facilitate greater investment in local government infrastructure.
According to the Budget Review, the 2018-19 budget accelerates the government’s efforts to narrow the budget deficit and stabilise debt, laying the foundation for faster growth in the years ahead.
“By taking steps now to strengthen the fiscal position, [the] government will widen the path for new investment and inclusive, job-creating growth in the years ahead, while creating space to meet new spending commitments,” the Budget Review says.