- South Africa to Raise Economic Projection for 2018, Says Nene
Growing business confidence in South Africa following the exit of Jacob Zuma is projected to boost economic growth in 2018.
According to the Finance Minister, Nhlanhla Nene, governance and financial issues that have lowered business confidence are now being addressed by Cyril Ramaphosa, therefore, South Africa’s National Treasury is likely to raise economic projection for the year in its October mid-term budget.
The reappointed Minister that was fired under Jacob Zuma administration said policy uncertainty and weak productivity saw Fitch Ratings Ltd. and S&P Global Ratings lowered South Africa’s credit to junk in 2017, making economic recovery even tougher as business confidence plunged for the most part of the year.
In February, the National Treasury forecast 1.5 percent growth rate for 2018, higher than the 1.1 percent previously projected. However, the institution is predicting that the economy will accelerate to 2.1 percent in 2020 as measures aimed at strengthening the economy start crystallizing and investment inflow pick up.
“Prospects look good for an improvement in growth forecasts,” Nene told reporters east of Pretoria Monday.
The government has announced it will raise value-added tax for the first time in 25 years in April to stabilize its debt and prevent additional junk credit rating. The additional tax revenue, estimated at 36 billion rand ($3 billion) will help the government finance revenue shortfall estimated at 48.2 billion rand, this coupled with a budget cut of 49 billion rand should strengthen the economic outlook in 2019 through 2020.