FINANCE Minister Pravin Gordhan remains optimistic about South Africa’s economic outlook for this year despite disappointing economic data pointing to slower growth in the first quarter.
There has also been a string of downward revisions to economic growth forecasts for the country by several institutions‚ the latest being the International Monetary Fund (IMF).
Gordhan said Treasury maintained its forecast for the economy to grow 2.7% this year despite the IMF last week significantly lowering the country’s economic growth outlook to 2.3% from an earlier 2.8% projection.
The global lender cited strikes in platinum mining and power supply disruptions as factors that contributed to the downward revision.
These factors could see local export volumes come under pressure and the country failing to fully take advantage of a recovery in global demand.
Gordhan said Treasury remained confident of higher economic growth given that the general assessment was of a slightly less risky global environment.
The IMF expects higher global economic growth this year – which is likely to benefit South Africa through higher export volumes.
“The possibility of serious negative turbulence is lesser and for South Africa that is good news because we require‚ like many other emerging markets‚ a more stable global environment‚” Gordhan said.
The recovery is being led by the US and Europe but indications are that domestic growth in the first quarter of the year may have moderated.
Mining and manufacturing production data for February came in last week well below expectations‚ mainly as a result of protracted strikes at platinum mines. The two sectors together account for a significant share of gross domestic product.
“The strikes or some of the labour issues in the mining sector have been longer lasting than expected. That affects production and exports‚” IMF World Economic Outlook division head Thomas Helbling said.
He also said that capacity constraints in electricity supply were holding back production‚ particularly in manufacturing.
Most economic activity has‚ since the recession‚ been driven by significant government spending. Interest rates also fell to 30-year lows. As global economic growth gains traction‚ the IMF is calling on governments to start collecting more taxes and accumulating reserves to rebuild coffers that were depleted in the recession.
Gordhan said the Treasury had been ensuring a gradual fiscal consolidation path to avoid negatively affecting growth.
The government plans to spend more than R800-billion on infrastructure over the next three years. The months ahead will be important for the government’s monetary policy as the US Federal Reserve continues to tighten monetary stimulus. — BDLive
Gordhan upbeat on growth despite data
There has also been a string of downward revisions to economic growth forecasts for the country by several institutions‚ the latest being the International Monetary Fund (IMF).
Gordhan said Treasury maintained its forecast for the economy to grow 2.7% this year despite the IMF last week significantly lowering the country’s economic growth outlook to 2.3% from an earlier 2.8% projection.
The global lender cited strikes in platinum mining and power supply disruptions as factors that contributed to the downward revision.
These factors could see local export volumes come under pressure and the country failing to fully take advantage of a recovery in global demand.
Gordhan said Treasury remained confident of higher economic growth given that the general assessment was of a slightly less risky global environment.
The IMF expects higher global economic growth this year – which is likely to benefit South Africa through higher export volumes.
“The possibility of serious negative turbulence is lesser and for South Africa that is good news because we require‚ like many other emerging markets‚ a more stable global environment‚” Gordhan said.
The recovery is being led by the US and Europe but indications are that domestic growth in the first quarter of the year may have moderated.
Mining and manufacturing production data for February came in last week well below expectations‚ mainly as a result of protracted strikes at platinum mines. The two sectors together account for a significant share of gross domestic product.
“The strikes or some of the labour issues in the mining sector have been longer lasting than expected. That affects production and exports‚” IMF World Economic Outlook division head Thomas Helbling said.
He also said that capacity constraints in electricity supply were holding back production‚ particularly in manufacturing.
Most economic activity has‚ since the recession‚ been driven by significant government spending. Interest rates also fell to 30-year lows. As global economic growth gains traction‚ the IMF is calling on governments to start collecting more taxes and accumulating reserves to rebuild coffers that were depleted in the recession.
Gordhan said the Treasury had been ensuring a gradual fiscal consolidation path to avoid negatively affecting growth.
The government plans to spend more than R800-billion on infrastructure over the next three years. The months ahead will be important for the government’s monetary policy as the US Federal Reserve continues to tighten monetary stimulus. — BDLive
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