Pravin upbeat on growth
FINANCE Minister Pravin Gordhan has expressed hope in the country’s economy, saying it will pick up in the next year in spite of the current challenges of low growth and a lack of business confidence.
But Gordhan warned MPs yesterday that for the economy to achieve higher growth, there were key things that needed to be done.
Gordhan was briefing the standing committee on finance and appropriations in Parliament on the Medium-Term Budget Policy Statement (MTBPS).
MPs expressed confidence in Gordhan’s “realistic” midterm budget, which he had tabled in the House the day before.
However, Gordhan said fiscal consolidation would not happen if certain things were not done.
“If we create the right conditions for jobs, we will create conditions for growth,” he said.
The National Treasury has revised this year’s growth forecast from 0.9 to 0.5 percent.
It said this will pick up to 1.7 percent next year.
Gordhan said all the right signals were there, and there was hope for the country to do better.
He said South Africa’s economy was growing at an average of 4 percent before the global financial crisis of 2008. The country has been able to hold off despite low growth since then.
Monale Ratsoma, head of economic policy at the National Treasury, told MPs the growth projections in the MTBPS reflected the state of the economy.
Business confidence needed to improve so that business would invest.
He said there was no question that business was investing 80 percent in the economy.
“There are green shoots that are beginning to emerge,” he said.
When they looked at the performance of the sectors of the economy, they found there were sectors that were declining, including agriculture, manufacturing and mining.
Ratsoma said all that was needed was stability in these three sectors and the economy will pick by up to 2 percent.
However, he said this was still far from the target of 5 percent economic growth.
Government had set a target of 5 percent economic growth by the end of the 2019 financial year.
If unemployment was still sitting at 26 percent and growth was projected in 2018, unemployment figures would not change immediately.
The numbers would remain the same and unemployment would drop soon after that.
Ramotsa said the government would still need to resolve constraints in mining, agriculture and manufacturing.
Statistics South Africa has shown in its reports that mining has been bleeding jobs in the past few years. It said mining had shed 60 000 jobs over the last six years.
Lungisa Fuzile, director-general in the National Treasury, said South Africa’s economy shows low levels of business confidence.
“A growing economy yields high revenues and enables a government to expand its programmes.”
He said they needed to work with all the stakeholders to grow the economy.