SA will miss 2014 economic growth target – Nene

South Africa will probably miss this year’s economic growth target of 2.7%, with a five-month mining strike hurting everything from government revenue to exports, Finance Minister Nhlanhla Nene said.

The economic outlook “has moderated,” Nene told reporters on Tuesday in the capital, Pretoria. Recent forecasts by the International Monetary Fund and others show “the economy is not going to grow as fast as we had anticipated,” he said.

Gross domestic product contracted an annualised 0.6% in the first three months of the year as mining output dropped 25%, the most in almost half a century. The economy is at risk of shrinking again as about 220 000 metalworkers began an indefinite strike over pay on Tuesday.

The mining strike that ended last week “had a significant impact on the economy”, Nene said. “It’s going to take a bit of time for the economy to return to its pre-strike performance.”

Standard & Poor’s cut South Africa’s credit rating to one level above junk on June 13, citing concerns that the government’s finances may be harmed as growth slows. Fitch Ratings reduced its outlook on the nation’s creditworthiness to negative from stable on the same day.


The government has pledged to narrow the budget deficit to 2.8% of GDP in three years’ time from 4% in the fiscal year that ended in March. President Jacob Zuma pledged in his state-of-the-nation speech last month to grow the economy at 5% by 2019.

Current account
In a separate speech, Nene said the current-account deficit has remained “stubbornly high” even as the rand weakened and the economy contracted. The gap on the current account, the broadest measure of trade in goods and services, narrowed to 4.5% of gross domestic product in the first quarter, the central bank said on June 18.

The rand fell 0.1% against the dollar to 10.6465 against the dollar today, taking its decline this year to 1.5%.

Economic policy in Africa’s second-largest economy is focused on implementing a 20-year National Development Plan that seeks to cut the jobless rate to 14% by 2020 from 25%.

“It is driven at the highest level and it is given priority in our planning,” Nene said. “I would have no reason to doubt the commitment and the resolve of government to implement the NDP.” – Bloomberg

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Rene Vollgraaff
Guest Author

Related stories

Ramaphosa to appoint commission of inquiry to probe PIC

The PIC recently announced it was appointing a forensic investigator to look into its investment in the embattled VBS Mutual Bank

What the BRICS summit means for SA

Heads of states from Brazil, Russia, India and China are expected to attend the summit held between July 25 and 27

Moyane wants Ramaphosa, Gordhan grilled at his disciplinary

Suspended Sars boss demands Ramaphosa and Gordhan avail themselves for cross-examination at his disciplinary inquiry

Costly Head winds pummel SAA

The free-spending chief executive’s British hire is set to earn a cool R5m for just six months’ work

Eskom wage talks: Unions want meeting with Nene, Gordhan

Eskom spokesperson Khulu Phasiwe confirmed on Wednesday morning that the unions decided to take Eskom’s proposal to the ministers

Nene to chair board of governors of BRICS bank

The finance minister was elected to the position at a meeting of the bank’s leadership taking place in Shanghai, China.
Advertising

Subscribers only

Free State branches gun for Ace

Parts of the provincial ANC will target their former premier, Magashule, and the Free State PEC in a rolling mass action campaign

SAA bailout raises more questions

As the government continues to grapple with the troubles facing the airline, it would do well to keep on eye on the impending Denel implosion

More top stories

Unite with Nigeria’s ‘Speak Up’ generation protesting against police brutality

Photos of citizens draped in the bloodied flag have spread around the world in the month the country should be celebrating 60 years of independence

Hawks swoop down with more arrests in R1.4-billion corruption blitz

The spate of arrests for corruption continues apace in Gauteng and the Eastern Cape.

Catholic NGO boss accused of racism and abuse in Sudan

The aid worker allegedly called his security guard a ‘slave’

Agrizzi too ill to be treated at Bara?

The alleged crook’s “health emergency” — if that is what it is — shows up the flaws, either in our health system or in our leadership as a whole
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday