Economic growth facing challenges – Godongwana

Finance Minister Enoch Godongwana says international and local challenges continue to pose as obstacles in the growth of the economy.

This as real Gross Domestic Product (GDP) grew by some 1.6% in the third quarter of 2022.

Speaking at the Pre-World Economic Forum (WEF) business breakfast held in Johannesburg on Thursday, the Minister said the impact of the COVID-19 pandemic on employment and investment continue to have an impact on growth and warned that the ongoing war between Russia and Ukraine could have a devastating impact.

“The theme [for the WEF meeting], Cooperation in a Fragmented World, captures the combination of economic, geo-political and social challenges that are facing the world. Our common challenges here at home are being compounded by all these risks.

“If the Europeans continue to impose more sanctions on Russia and the war does not come to an end, we are all likely to face a recession.

“In the face of all of these challenges, this government has been clear that rebuilding investor confidence and mobilising investment, is among the chief priorities this government must achieve for growing our economy,” he said.

Minister Godongwana said coupled with these international challenges, economic growth is also facing challenges closer to home.

“There’s a tendency in South Africa to debate…macro-economic theory and which theory is right. You can have the best policy on paper but if you can’t provide electricity, it’s useless. If you can’t deal with crime, your policy can’t work…and similarly with the logistics challenges, particularly Transnet,” he said.

Regarding Eskom, the Minister said an announcement is due to be made next month.

“We want to resolve the Eskom issues as soon as possible. Part of that resolution is to make sure that they have a healthy balance sheet so that they should be able to do what they should do best.

“In my humble view they should be prioritising what they do have…in making sure that [of] the 48 000MW at least 32 000MW are working. That is why it is critical for us to clear that balance sheet and we will make an appropriate announcement on the 22nd of February,” he said.

The Minister said some of these challenges have led to National Treasury to project a real Gross Domestic Product (GDP) growth of 1.6% until 2025 which is revised downwards from 1.8% in last year’s budget speech.

“Everybody wants investment, no doubt about that. It is critical for growth. Together we can achieve a greater growth provided we can deal with some of the issues raised.

“We have Operation Vulindlela whose main focus is structural reforms. Of particular focus on those structural reforms is networking industries. In addition, it is to deal with red tape. We are engaging these issues. I have referred to the electricity challenge and some work is being done to deal with those issues,” he said.

The Minister urged the business people who will be part of South Africa’s delegation at the WEF to work with government to resolve the challenges facing the country.

“We have got to find a solution together. I’m saying that even as we go to Davos, we must begin to say how we work together on all of these things. All these areas I’ve mentioned, there should be a possibility that we could work together,” Godongwana said.