The 2017 economic forecast made by President Jacob Zuma has come under strong public criticism as many view his predictions of a 2.9% economic growth this year, as a little too far from reality.
President Jacob Zuma said on Sunday that the ruling African National Congress (ANC) is optimistic that South Africa will achieve a decent economic growth rate this year despite the slow recovery in the global economy.
Speaking during the ANC 105 birthday bash at Orlando Stadium in Soweto, Johannesburg, Zuma predicted a 2.9% economic growth forecast in 2017 which is widely described as way above other financial forecasts.
He said SA’s economy had created jobs and made rapid strides in eradicating poverty, joblessness, and inequality when it was growing at an average of nearly four percent prior to the 2008 global crisis.
He, however, recounted that the global economic recovery had been “very unstable” since then and SA, being connected to the global economic system, has been impacted negatively with investment by private sectors drastically falling.
“Trade between countries has fallen. Growth in sub-Saharan Africa is estimated to have slowed to 1.4 percent in 2016 from 3.4 percent in 2015.” But, he said, “The ANC is optimistic that the 2017 growth forecast of 2.9 percent will be achieved.”
“The ANC expects to see an increase in production and growth in job creation. We shall remain vigilant in ensuring that mining communities benefit from mining activities in their areas and the ANC proposes that all stakeholders engage on how to utilise beneficiation more effectively to ensure economic growth and job creation,” Zuma said as he points out that the ANC was encouraged by the recent rise in commodity prices and was relatively confident that the SA mining sector would begin to show an improvement in the near future.
Meanwhile, Dr. Azar Jammine, Chief economist at Econometrix said Zuma’s 2017 economic forecast was way off with his estimations, and that the only way the country would see such a large growth would be through a resurgence of commodities.
“I think we should see a figure somewhere between 1-2%. 2.9% is really over the top of most people’s forecast”, said Jammine. “There is no question that 2017 is likely to be volatile politically, especially in the run for the ANC’s elective conference in December”.
His 2017 economic forecast follows a predicted growth rate of 0.8% in 2017 by the International Monetary Fund while the South African Reserve Bank expected a growth of around 1.2% over the course of the year.
South Africa’s political volatility has been mentioned as one of the biggest national factor inhibiting growth in the economy, but, Jammine noted it was more likely to be international markets that had the biggest effect on the rand.
Notably, an expected resurgence of the dollar combined with an increase of US interest rates will affect South African commodity prices driving down growth.
Zuma however, said South Africans had shown tremendous spirit and patriotism in all endeavors to maintain the country’s sovereign credit ratings and commended every person who contributed to avoiding a credit downgrade.