South African economic outlook seems to be gradually worsening. Indeed, in his first presentation of the budget, the new finance minister Tito Mboweni (photo), indicated that the country’s growth could be less than forecasted.  

The official announced that 2018 economic growth would be 0.7%, representing less than half of the figures announced previously. The recent recession into which South Africa moved coupled with the rising debt (via public companies notably) seems to leave just few spaces to strong growth while the local currency (Rand) is more volatile against the US dollars.

On the other hand, budget deficit should rise to 4% during the ongoing fiscal year against a previous forecast of 3.2%. It should increase to 4.2% in the coming two years, exacerbated by poor fiscal performances (fiscal revenues would be less than forecasted till 2020/2021).  

"Government needs to take some difficult decisions to get the economy on a higher growth path and to encourage job creation", the minister said in statements reported by Bloomberg.

The government expects to attract $100 billion investments in the country in the coming five years and, it elaborated a programme aimed at maximizing investments in infrastructures and reduce the rising unemployment rate (27%). To that regard, they announced reallocation of $3.5 billion from the budget to an economic activity on standby.

It is worth reminding that in a report published some days ago, IMF reduced the country’s 2018 growth prospect from 1.5% to 0.8%.

Moutiou Adjibi Nourou