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Brief note intended as a more regular interface with our clients. The emphasis is to provide our interpretation of important economic events, such as South African Reserve Bank interest rate statements, and key data releases, including GDP growth figures.
Against the backdrop of much weaker global economic prospects than during early 2011, Finance Minister Pravin Gordhan’s third Medium-Term Budget Policy Statement (MTBPS) provided a more downbeat outlook for the SA economy and the fiscal position than was the case in the February Budget. Besides announcing a package worth R25bn over six years to boost the competitiveness of SA Inc and moves to attract more foreign companies to the JSE, the MTBPS contained no apparent headline grabbing announcements. However, in our view the most significant thread running through the document and the Minister’s speech was a welcome confirmation that, in order to contribute to a higher GDP growth rate and employment in future, the composition of government outlays has to shift from consumption to investment.
