Due to a series of negative factors, South Africa's economic growth projections for 2017 have to be revised down from 1.3 percent as previously predicted to 0.7 percent, Finance Minister Malusi Gigaba said on Wednesday.
That is still higher than the 0.5 percent recently projected by the International Monetary Fund, Gigaba told parliament as he delivered his Medium-Term Budget Statement.
Economic growth is subsequently expected to recover slowly, reaching 1.1 percent in 2018, 1.5 percent in 2019 and 1.9 percent in 2020 as the international economic outlook improves, he said.
The weaker growth outlook reflects a continued deterioration in business and consumer confidence that has gathered pace since 2014, the minister said.
"Disappointingly, between 2010 and 2016, the level of economic growth compares very poorly against our NDP (National Development Program) ambitions," Gigaba said.
Consequently, gross domestic product (GDP) per capita has declined for two consecutive years, and millions of South Africans are living in poverty, with unemployment at 27.7 percent, the highest level since September 2003, according to the minister.
Moreover, wealth remains highly concentrated -- 95 percent of the wealth is in the hands of 10 percent of the population, Gigaba said.
Due to lower than expected economic growth this year, gross tax revenue for 2017/18 is projected to be 50.8 billion rand (about 3.7 billion U.S. dollars), lower than projected in the February budget, said Gigaba.
The consolidated budget deficit will widen to 4.3 percent of GDP in 2017/18, against a 2017 budget target of 3.1 percent of GDP, he said.
Gross national debt is projected to reach 61 percent of GDP by 2022, with debt-service costs approaching 15 percent of main budget revenue by 2020/21, said Gigaba.
Despite fiscal pressures, the government will continue to protect spending on core social programs that benefit poor South Africans, Gigaba said.
Over the next three years, consolidated spending will increase by an annual average of 7.3 percent, from 1.6 trillion rand (about $117 billion) in 2017/18 to 1.9 trillion rand (about $138 billion) in 2020/21, according to Gigaba.
Infrastructure investment will amount to 948 billion rand (about $69 billion) over the next three years, he said.
To take advantage of the global economic growth, South Africa must get out of its own way and forge a working coalition for inclusive growth and economic transformation, Gigaba said.
(Xinhua News Agency October 25, 2017)