South Africa Cuts Growth Projection for 2018

• South Africa Cuts Growth Projection for 2018

South Africa has halved its growth projection for 2018, citing wider budget deficits for the 2018/19 fiscal year and the next two years.

In a medium-term budget policy statement (MTBPS) released on Tuesday, the Treasury said the economy is weighed upon by recession and shortfalls in tax revenue.

Therefore, projected that the estimated budget deficit for the 2018/2019 fiscal year would widen from 3.6 percent to 4 percent of GDP.

While, the deficit is seen rising to 4.2 in the next two years, according to the Treasury.

Also, the Treasury lowered growth forecast for this year to 0.7 percent, 50 percent of what was previously projected.

South Africa’s economy contracted by 2.6 percent in the first quarter of 2018 and 0.7 percent in the second quarter of the year due to the weak growth recorded in the agricultural, retail and transport sectors.

Earlier this month, the world bank had lowered South Africa’s growth projection from 1.4 percent to 1 percent, saying Africa’s second-largest economy needs to do more in terms of revenue generation.

In the next three years, tax revenue is expected to underperform significantly.

The rand fell against the US dollar to 14.56 on Tuesday.South Africa’s fiscal year runs from April to March.