The Finance Ministry has acknowledged the fact that South Africa’s Gross Domestic Product (GDP) contracted 0.7% in the first quarter of 2017.
It has also acknowledged that this worse-than-expected GDP outcome introduces significant downward bias to the GDP growth estimates communicated in the 2017 Budget Review, which projected 2017 GDP growth at 1.3%.
The Ministry believes that despite the GDP contraction, there are green shoots that South Africa can leverage on to boost its own economic growth outlook. These include:
- improving global growth,
- stabilising commodity prices,
- more favourable climate conditions,
- reliable electricity supply, and
- less volatile labour relations
The Finance ministry has indicated that current growth rate, if sustained, will lead to a further decline in GDP per capita and revenue, risking the sustainability of South Africa’s fiscal framework and more importantly undermining the delivery of social services.
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The Ministry has indicated that the current state of the economy puts more pressure on government,business, labour and broader society to intensify it’s growth programme and improve confidence as a matter of urgency to arrest the decline and set the economy on a higher growth trajectory.
As part of this process the Minister of Finance Malusi Gigaba will be seeking a meeting with business leaders soon to discuss ways of working together to achieve inclusive economic growth.
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