Economy expected to grow by 3 percent by 2017

SOUTH Africa’s economy is expected to grow by three percent by 2017 as the country has taken several steps to address the challenge of energy, says Finance Minister Nhlanhla Nene.

Speaking at the Third Common Wealth Stakeholders Conference, Minister Nene said the growth of the economy will be influenced by more electricity coming onto the grid, the improvement of consumer spending and the rise in trade with the rest of Africa.

“Gross Domestic Product (GDP) growth in the first quarter of 2015 was at 1.3 percent quarter-on-quarter on a seasonally adjusted and annualised basis, highlighting the negative impact of the energy challenges that the country is facing,” Nene said.

He said South Africa’s main constraints to the growth of the economy were domestic in nature.

“South Africa has committed to promoting structural reforms that are needed to lift growth over the long term.
“Government’s Medium-Term Strategic Framework sets out how we will achieve the goals of faster growth, higher employment and lower inequality in the National Development Plan (NDP),”  Nene said.

He said South Africa is making good progress in areas such as ports reform, the introduction of a single transport regulator, broadband rollout and the reform of key state owned enterprises such as South African Airways (SAA) and Eskom.

Government has also had success in putting in place policies that target job creation such as the Jobs Fund, Expanded Public Works Programme (EPWP) and the Employment Tax Incentive (ETI).

Nene said government has committed itself to narrowing the budget deficit and stabilising debt by introducing and sticking to expenditure ceilings and taking measures to raise revenue.

“The 2015 Budget emphasizes the need for government to strengthen budget preparation and expenditure controls to improve efficiency of resource allocation and the composition of spending.

“Capital remains the fastest-growing item of non-interest expenditure over the medium term, while progress is being made to limit the rate of spending growth for current expenditure,” Nene said.

Limiting the rate of spending has been done while protecting spending in key areas such as education and health.