South African government cuts 2014 GDP growth forecast to 2.7%.

By bne IntelliNews February 27, 2014

South Africa's government cut its GDP growth forecast for 2014 to 2.7% from a 3.0% previously announced in October, Finance Minister Pravin Gordhan said in his last budget speech for the government’s 2014 budget before the elections scheduled on May 7.

Preliminary data from Statistics South Africa showed earlier this week that South African economy has grown 1.9% in 2013 and the government also forecasts the GDP growth will accelerate to 3.2% in 2015 and 3.5% in 2016.

The government’s latest GDP growth estimates fall short from the country’s average 5% GDP growth performance recorded in the five years prior to the 2009 recession and are seen unsatisfying to slash about 25% of unemployment rate.

Despite the decline in GDP growth forecasts, the government also cut its budget deficit forecast to 4.0% of GDP for 2014/15 fiscal year from a previous forecast of 4.1% announced in October. It also cut the budget deficit forecast for 2013/14 fiscal year ending in March to 4.0% of GDP from a previous 4.2%.

As the reasons for the government’s recent cut in its budget deficit forecasts despite the simultaneous declines in GDP growth forecasts, Gordhan cited the decline in projected government spending, despite elections in May, and the increase in tax revenues due to the ZAR depreciation. The government’s forecasts contain economic uncertainty and a new round of wage negotiations in 2015, according to Gordhan.

The government forecasts headline CPI inflation to accelerate to 6.2% this year from 5.7% in 2013 and to decelerate again to 5.9% in 2015. A weak ZAR is seen as a significant risk for the country’s inflation outlook. South African government also forecasts a current account deficit to GDP ratio of 6.1% for 2013, 5.9% for 2014 and 5.8% for 2015.

Related Articles

South Africa’s MTN to invest $350mn in Iranian broadband

South Africa’s MTN said it has agreed, on a non-binding and preliminary basis, to invest an initial $350mn into Iranian fixed broadband provider Iranian Net. The investment will give ... more

South Africa receives another downgrade to junk

Fitch Ratings on April 7 downgraded South Africa to junk status following the removal of Pravin Gordhan as finance minister and the enusing political crisis. Fitch's downgrade to 'BB+' ... more

S&P downgrades South Africa's credit rating to junk after cabinet reshuffle

Standard & Poor’s ratings agency has cut South Africa's sovereign credit rating to 'BB+' from 'BBB-' and the long-term local currency rating to 'BBB-' from 'BBB', both with a negative ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at