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South Africa economic growth forecast slashed | South Africa economic growth forecast slashed |
(about 1 hour later) | |
South Africa has downgraded its economic growth, but the country's new finance minister pledged to keep a tight rein on government spending. | South Africa has downgraded its economic growth, but the country's new finance minister pledged to keep a tight rein on government spending. |
Nhlanhla Nene told parliament in his medium-term budget statement that economic growth would only be 1.4% this year. | Nhlanhla Nene told parliament in his medium-term budget statement that economic growth would only be 1.4% this year. |
GDP growth was earlier forecast at 2.7% in the full budget back in February. | GDP growth was earlier forecast at 2.7% in the full budget back in February. |
South Africa suffered a prolonged strike on its platinum mines earlier this year. | South Africa suffered a prolonged strike on its platinum mines earlier this year. |
Meanwhile, the budget deficit was forecast at 4.1% for this fiscal year, compared with a previously predicted figure of 4%. | Meanwhile, the budget deficit was forecast at 4.1% for this fiscal year, compared with a previously predicted figure of 4%. |
"The weak economic performance has put a great deal of pressure on the fiscus, with revenue insufficient to cover expenditure," Mr Nene said in his speech. | "The weak economic performance has put a great deal of pressure on the fiscus, with revenue insufficient to cover expenditure," Mr Nene said in his speech. |
Economists were looking for some hints at government spending cuts, as more than half of the national income goes on welfare payments and the public sector wage bill. | |
In the event, Mr Nene said there would be a reduction in the rate of the growth of government spending, but not a cut. | |
As such, he said an additional revenue of 15bn rand ($1.36bn) a year would need to be raised. | |
In his speech, Mr Nene hinted at possible privatisation of certain state assets, but did not actually use the word itself. | |
"In some instances, government will dispose of non-strategic assets to raise resources for financial support," he said. | |
Some of the proceeds from the sale of "non-strategic" assets would go towards propping up the state-run electricity company, Eskom. | |
South Africa's economy has suffered somewhat of late. Industrial action has reduced output from the country's platinum mines and the weak rand has failed to stimulate exports. | South Africa's economy has suffered somewhat of late. Industrial action has reduced output from the country's platinum mines and the weak rand has failed to stimulate exports. |
The economy, which has also been overtaken by Nigeria as the continent's largest, was also subjected to downgrades from the ratings agencies. | The economy, which has also been overtaken by Nigeria as the continent's largest, was also subjected to downgrades from the ratings agencies. |
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