While South Africa’s economy grew by an estimated 2.5% in 2022, the growth outlook has deteriorated to a predicted 1.4% growth over the next three years.

This was compared with the 1.6% prediction in the 2022 Medium Term Budget Policy Statement (MTBPS).

The crystal glazing was on Wednesday outlined by Finance Minister Enoch Godongwana while delivering the 2023 Budget Speech, at the Cape Town City Hall.

In real terms, the Treasury anticipates that the Gross Domestic Product (GDP) will grow by a fractional 0.9% in 2023.

The Minister said: “At R4.6 trillion, the size of the economy in 2022 was bigger than the pre-pandemic levels in real terms; evidence of a robust economic recovery even in the face of lingering COVID-19 scarring.”

In this regard, he said implementing growth-enhancing reforms “is a crucial element of our growth strategy”.

Expanding on this, the National Treasury said in documents given to media ahead of the Budget Speech, that inadequate electricity supply remains the most immediate and significant constraint to production, investment and employment.

The department said this was compounded by disruptions to and underinvestment in freight and logistics networks, which erode competitiveness.

“Rising inflation has constrained household spending and raised the cost of living.”

With global growth expected to slow down in 2023, the Minister said central banks around the world were countering the effects of high inflation through increased interest rates.

In the Budget Review it states that while headline inflation seems to have peaked in many countries, it remains high.

“A number of global risks remain, implying the need for stronger domestic demand to support economic growth,” it reads.

Godongwana said South Africa needs much higher growth to address unemployment and poverty. This, he said, requires continued commitment to a macroeconomic framework that encourages investment, accelerated progress on reforms under way, and improved state capability. – SAnews.gov.za

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