Positive predictions about South Africa’s economy

South Africa’s economic situation is improving but the Treasury Director-General Lungisa Fuzile declared that the target growth of 7 percent that is required to reduce unemployment would not be reached without improving the infrastructure accumulation.

Fuzile announced at the Reuters Economist of the Year Award that Africa’s largest economy was on a sustainable fiscal track to attain a surplus by 2014/15. Despite that the Treasury has cut its growth forecast for 2012 to from 3.4 percent to 2.7 percent, it is expected to reach 4.2 percent by 2014.

“This economy is really steaming ahead … economic data released since the budget (in February) have been positive, which supports our view that the economy is on a more sure footing,” Fuzile declared.

However, warnings about the risk of global slowdown in power China, which imports resources from for example South Africa.

Structural constraints such as an electricity grid is creating problem for the energy-intensive mining sector and coal transport bottlenecks could slow down growth.

“Short of dealing with those structural constraints, that 7 percent growth target is not going to be achieved.”

According to Fuzile South Africa is on a sustainable fiscal path, this despite the warnings from the three major ratings agencies, which have downgraded their outlooks to negative from stable, arguing that long term risks were not being properly addressed by government.

Reuters.