Nene ‘over-optimistic’ about economic growth prospects – Stroebel

Presenting the 2015 budget in Parliament on 25 February, finance minister Nhlanhla Nene said that South Africa’s GDP growth forecast for 2015 has been reduced from 2,5% to 2%, but according to economists even a 2% growth rate might not be feasible.

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“This figure, even though low, may be an over-estimate, since other analysts expect growth to be as low as 1,4%,” said Lindie Stroebel, agribusiness intelligence manager at Agbiz, the representative chamber for agribusinesses in South Africa.

The energy crisis would have a deeper impact on growth than expected by government, said Stroebel in an statement. In fact, under-performance by industries was, in large part, due to insufficient energy supply and not under-investment.

Nene was ‘over-optimistic’ about South Africa’s ability to achieve the growth expected from such a constrained economy, said Stroebel.

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She referred in particular to the combined 80,5 cents/litre increase in the fuel levy and the levy for the road accident fund, which, she said, was “highly detrimental to promoting economic growth”.

“Even though Agbiz considers an increase in the fuel levy as an option to increase government income, the announced increase is too much and will have an increasing effect on the end price of consumer goods and a negative effect on the competitiveness of the economy as a whole,” said Stroebel.