Minister of Finance Trevor Manuel has outlined a very favourable picture of South Africa’s economy for the year, pointing to the National Treasury’s expectations of rising gross domestic product (GDP) growth, low inflation, a very low budget deficit and improving employment trends, as well as continuing strong capital inflows.
Speaking during the adoption of the finance ministry’s budget at Parliament on Tuesday, Manuel pointed out that GDP growth is expected to reach 4,3% this year, up from 3,7% in 2004, while inflation declined to 4,3% last year and will remain “well within” the target range of 3% to 6% CPIX (headline consumer inflation less mortgage rate changes).
“Our budget deficit is now about 1,5% of GDP, primarily because the South African Revenue Service harvested R354,9-billion in 2004/05, or R21-billion more than we anticipated at the time of the 2004 Budget. We witnessed capital inflows of R60-billion last year, and this trend continues.”
Furthermore, Manuel added, employment trends continue to improve, and business and consumer surveys all signal that there is a new optimism — “an unprecedented degree of confidence in our economic outlook”.
“The improving outlook is the hard-won fruit of the forward-looking macroeconomic plan we placed before this House in June 1996.”
The finance minister went on to add that, on the strength of this success, the government will be able to be “bolder yet” in the years ahead. It is “acutely aware” of the extent of the need for employment, broader participation in economic activity, relief from the poverty trap, housing, better education and reliable health services.
“These challenges have disciplined our policies and budget plans over the past 10 years, and they remain firmly in mind in the growth and development strategy for the decade ahead.” — I-Net Bridge