JOHANNESBURG - Finance Minister Tito Mboweni again began his national budget speech in Parliament by referencing his Aloe Ferox plant, saying that it survives and strives when times are tough.
Mboweni, who was delivering his second Budget under the current administration, went on to say that the country's economy will be on the winning path once again.
"We have it within ourselves to be the best in the world. Congratulations to Miss Universe Zozibini Tunzi, the Springboks, and the Proteas, who won while we were preparing this Budget. Our economy has won before, and it will win again," Mboweni stated.
Mboweni expressed that before democracy, the country's growth was pedestrian, and between 1990 and 1992, the economy contracted for three years in a row.
"In the fifteen years following democracy, economic growth averaged 3.6 per cent a year. The gross debt-to-GDP ratio declined from 46 per cent to 26 per cent. In the five years from 2003 to 2008, growth averaged around 5 per cent, and South Africa was amongst the fastest-growing major economies. The unemployment rate improved by 5 percentage points," Mboweni stressed.
"Now, even after a decade of weak economic performance, South Africa still boasts deep and liquid capital markets, strong institutions, the most diversified economy on the continent, and a young population," Mboweni said in his speech.
Economic Context
Mboweni said that in 2020, global economic growth is expected to strengthen to 3.3 per cent. Global inflation remains contained.
"Global monetary policy is supportive, and we are benefiting from demand for emerging market assets. Asia (excluding Japan) is expected to grow by 5.8 per cent in 2020. The Coronavirus is a source of uncertainty to this forecast."
"With growth of 3.5 per cent, sub-Saharan Africa is forecast to be the second fastest growing region in the world."
The country's finance boss went on to say, that based on these facts, he expects the South African economy to grow by 0.9% and inflation will average 4.5% in 2020.
Mboweni said that over the next 18 months, the economy should get a number of jump starts.
These include:
- The fruits of the reform agenda led by the President
- Lower inflation
- The interest rate reduction earlier this year
- The recent gains in platinum group metals prices
- The impending change to the electricity regulatory framework
- The tax proposals we are setting out today
"Persistent electricity problems will, however, hold back growth. Over the next three years, we expect growth to average just over 1 per cent. Therefore, a stable supply of electricity will be our number one task," Mboweni said.