MEDIUM-TERM BUDGET: BLEAK OUTLOOK
Downgrades on their way soon, say analysts
With credit rating reviews expected in November, economists fear Gigaba’s risky statement may plunge SA further into the subinvestment grade sooner than expected
The brutally honest medium-term budget policy statement spells worrying news to come for SA as the economy falls deeper into a low-growth trap and the threat of further credit rating downgrades looms. The Treasury slashed its economic growth forecast from 1.3% to 0.7% in the policy statement. Over the medium term, GDP growth is expected to rise to a muted 1.9% by 2020. While the statement painted a realistic picture of SA’s woes, the worry is that the solutions spelt out in the National Development Plan (NDP) — relied on heavily by Finance Minister Malusi Gigaba — will continue to disappoint as the government fails to implement the plan. Magnified by persistently low confidence levels, SA is straying further away from the NDP’s goals, which require economic growth of 5.4% per year and a 6% decrease in unemployment by 2030. Speaking on Wednesday, Gigaba said: "Five years on from the adoption of the NDP Vision 2030, the fast growth that will enable us to make substantial progress in e...
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