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.
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.
BUSINESS REPORT ONLINE