SA growth outlook down since Gordhan's last budget
19 October 2016
Cape Town – South Africa’s growth outlook for 2016 has worsened since Finance Minister Pravin Gordhan delivered his budget speech in February and is now expected to be between 0.1% and 0.4%, the Parliamentary Budget Office said on Wednesday.
Briefing a joint committee meeting of MPs that belong to Parliament’s three finance committees, the Budget Office said South Africa will experience its lowest annual gross domestic product growth in five years due to a poor outlook for investment and private consumption, fiscal consolidation and slowdown in public spending and a subdued global growth outlook.
The country’s high debt to GDP ratio is also a great concern and has climbed from 26% in 2009 to close to 50%. The servicing of debt cost could increase significantly if South Africa gets a sovereign credit rating downgrade at year-end.
Gordhan said on a previous occasion that South Africa will soon owe close to R2trn in debt and if the country is to get a ratings downgrade in December the interest that needs to be paid on these loans will increase significantly. Of the R1.4trn that South Africa has spent this year, R160bn will be spent on interest earned on debt.