Growth in the government’s capital spending moderated in the first half of the year to 5.7 percent, compared with 8.5 percent in the first half of last year, according to the medium-term budget policy statement.
“Industrial action at the Medupi power plant in the first quarter and delays in capital spending by Transnet and the SA National Roads Agency Limited, caused investment growth in electricity and transport sectors to slow,” the Treasury said yesterday.
Private sector growth has been even slower, as businesses hesitate to commit to long-term decisions in an uncertain policy environment.
“Growth in private investment, which accounts for over two-thirds of total gross fixed capital formation, totalled 3.2 percent in the first half of this year,” it added, and predicted growth of 3.5 percent in the year as a whole.
It attributed the rising trend to “higher levels of domestic and global demand, relatively low borrowing costs, improvements to infrastructure, particularly electricity, and improved business confidence”.
Total capital investment is expected to grow 4.1 percent this year. – Ethel Hazelhurst