Cape Town - Real gross domestic spending growth slowed to 2.6 percent in the first half of this year, from 3.8 percent in the second half of 2012, Finance Minister Pravin Gordhan said on Wednesday.
This was due to softer growth in household consumption spending and investment, he said in his Medium-Term Budget Policy Statement (MTBPS), tabled in Parliament.
Gordhan said household consumption growth was also expected to slow to 2.5 percent this year, from 3.5 percent in 2012, as a result of decelerating disposable income growth, a high debt burden, tightening lending conditions and rising inflation.
“Growth in this indicator is expected to rise to 3.4 percent by 2016, in line with improved economic conditions and employment gains.”
Growth in household credit extension slowed to 8.2 percent in August, from 8.7 percent a year earlier.
Growth in unsecured personal loans fell from 30.1 percent in December 2012, to a more sustainable 17 percent level in August this year.
Household disposable income growth declined to 2.6 percent in the first half of 2013, from four percent a year earlier.
Public and private investment growth in real gross fixed capital formation slowed to 4.1 percent in the first half of 2013, compared to six percent in the corresponding period of 2012.
Unplanned delays and sluggish uptake of new projects slowed investment spending by public corporations.
Public-sector investment growth fell to 5.7 percent in the first half of the year, from 8.5 percent in the first half of 2012.
Industrial action at the Medupi power plant in the first quarter, and delays in capital spending by Transnet and the SA National Roads Agency Ltd, caused investment growth in the electricity and transport sectors to slow.
Growth in private investment, which accounted for over two-thirds of total gross fixed capital formation, totalled 3.2 percent in the first half of 2013.
Private investment growth was projected at 3.5 percent in 2013, rising to 5.3 percent by 2016, supported by higher levels of domestic and global demand, relatively low borrowing costs, improvements to infrastructure, particularly electricity, and improved business confidence.
Total capital investment was projected to increase by 4.1 percent in 2013, and 6.3 percent in 2014. - Sapa