South Africa’s economy to grow by 2%

Finance Minister Nhlanhla Nene attributed this to the sluggish growth in the global environment, while domestically, security and energy constraints have contributed to the slowdown.

Tabling the 2015 Budget in the National Assembly on Wednesday, Finance Minister Nhlanhla Nene projected South Africa’s economy to grow by 2% in 2015, a downward revision from October’s mini budget.

The Minister attributed this to the sluggish growth in the global environment, while domestically, security and energy constraints have contributed to the slowdown.

“Mainly for this reason, our projected economic growth for 2015 is just 2%, down from 2.5% indicated in October last year. We expect growth to rise to 3% by 2017.

“Higher growth is possible if we make good progress in responding to the electricity challenges or if export performance is stronger. The best short-term prospects for faster growth lie in less energy-intensive sectors such as tourism, agriculture, light manufacturing and housing construction.

“These are also sectors that employ more people, and so they contribute to more inclusive growth. Efforts to support these sectors have to be intensified,” the Minister said while tabling the national budget on Wednesday.

Globally, economic growth is expected to remain sluggish over the period ahead, rising from 3.3% in 2014 to 3.5% this year.

There is considerable variation in economic performances between countries and economic trends are likely to be volatile, the Minister said. In the United States, 3.6% growth is expected this year but in Europe the outlook remains weak and could still be destabilised by disagreements between debtor and creditor nations.

“In emerging markets and developing economies, growth of about 4.5% is expected. China’s growth is expected to slow to 6.8% this year. Amongst our neighbours in Africa, the recent shifts in commodity prices will benefit some countries and disadvantage others.”

The Minister also said that South Africa will benefit from the lower oil price, but our major commodity exports have been negatively affected by the global slowdown. Our deepening trade and investment links with sub-Saharan Africa continue to offer favourable growth prospects.

“Exports to Africa grew by 19% in 2013 and 11% in 2014. However, our primary challenge is to deal with the structural and competitiveness challenges that hold back production and investment in our economy,” he said.