The South African economy will avoid a recession in 2016 but will remain in a low-growth trap, says Finance Minister Pravin Gordhan.
Speaking on the sidelines of the Nedgroup Investments Summit, he said National Treasury would revise its 0.9% growth forecast in time for the Medium Term Budget Policy Statement in October.
“I think we’ve said many times already that we’re unlikely to remain at 0.9%….We’ll give you the Treasury numbers in October this year when our forecasts will be put out for public consumption. But what we are confident about is that we are not going to get into a recession,” Gordhan said.
The minister’s comments come after the IMF cut its growth projection for the South African economy to 0.1% from 0.6%. The SA Reserve Bank does not expect the economy to grow in 2016, with governor Lesetja Kganyago saying that the domestic economy is in a low-growth trap.
Gordhan called on businesses to commit to the economy and invest in South Africa.
“Today, South Africa still offers a very good set of returns on the one hand but also, comparatively speaking, a reasonably stable investment climate notwithstanding some of the immediate challenges that we face,” he added.
“Our focus is now on how do you change that growth dynamic and what are the tools we have in our hands – whether they are fiscal tools, monetary tools, structural reform tools, but most importantly confidence and concrete investment tools – and how do we attract them in a way in which we can create more jobs, create more hope for young people to be trained and involved and absorb them in the economy,” he said in reference to doing things differently.
He added that growth didn’t appear with the click of a finger and that results of stakeholder efforts would manifest over the next year.
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