Cape Town - Finance Minister Pravin Gordhan is optimistic about the economy, saying yesterday that it would pick up in the next year despite the challenges of low growth and a lack of business confidence.
Briefing the standing committee on finance and appropriations in Parliament on the medium term budget policy statement (MTBPS), he, however, warned MPs that for the economy to grow, there were several key things that needed to be in place first.
“If we create the right conditions for jobs, we will create conditions for growth,” the minister said.
The National Treasury has revised this year’s growth forecast from 0.9 percent to 0.5 percent. It predicted that that would rise to 1.7 percent next year.
Gordhan said all the right signals were there, and there was hope for the country to do better.
He said the economy was growing at an average of 4 percent before the global financial crisis of 2008, and since then had been able to hold steady despite the low growth experienced.
The Treasury’s economic policy head, Monale Ratsoma, told MPs that the growth projections in the MTBPS reflected the state of the economy.
Business confidence needed to improve in order for business to invest.
He said there was no question that business was investing significantly in the economy.
“There are some green shoots that are beginning to emerge,” according to Ratsoma.
When looking at the performance of various sectors, it was found that some of them were declining, including agriculture, manufacturing and mining.
Ratsoma said all that was needed was some stability in these three sectors, and the economy would rise to 2 percent.
He said, however, that was far from the target of 5 percent economic growth.
The government had set a target of 5 percent economic growth by the end of the 2019 financial year.
Ratsoma said the government would still need to resolve various constraints in mining, agriculture and manufacturing.
Statistics South Africa has revealed in its reports that mining has been bleeding jobs in the past few years, with some 60 000 lost in the last six years.
Treasury director-general Lungisa Fuzile said the economy showed low levels of business confidence.
“A growing economy yields high revenues and enables a government to expand its programmes,” he said.
Fuzile said the government needed to work with all the various stakeholders in the country in order to grow the economy.
MPs expressed confidence in Gordhan and the mid-term budget he tabled in the House the day before.
THE STAR