South Africa cuts 2012 GDP forecast to 2.7 pct
CAPE TOWN, (Reuters)
However, in his budget speech to parliament, finance minister Pravin Gordhan said growth would pick up to 3.6 percent in 2013 and 4.2 percent the year after that as the effects of major government infrastructure spending filtered through.
The reduced 2012 projection is in line with forecasts by the central bank and International Monetary Fund, and shows how far South Africa is from the 7 percent growth deemed necessary to make a significant dent in 24 percent unemployment.
"We are not doing well enough in growing our economy and creating jobs for young people," Gordhan said.
The economy is estimated to have grown 3.1 percent in 2011.
Inflation hit 6.1 percent in January, largely due to weakness in the rand in the latter half of last year, and the budget forecast an average of 6.2 percent for the year - above the top end of a 3-6 percent central bank target range.
However, it is then likely to moderate to 5.3 percent and 5.1 percent in the next two years, the budget indicated.
Growth in domestic consumption - and hence imports - is likely to lead to a widening of the current account deficit to 4.4 percent of GDP by 2014 from 3.3 percent last year, although the shortfall should be funded comfortably by foreign investment inflows, it added.
The budget contained no new measures to temper volatility in the rand, which lost more than 20 percent against the dollar last year as concerns about euro zone debt caused global investors to dump riskier emerging market assets.
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