Publications
Partners
Pretoria - Debt contagion in Europe - where Greece, Ireland, Portugal and Spain had implemented austerity measures to stablise debt levels and contain upward pressure on borrowing costs - remained a serious risk to the growth outlook, the budget review said.
Other risks were overheating in emerging markets and volatile capital flows.
Despite this week’s upbeat growth figures, Finance Minister Pravin Gordhan is slightly less optimistic about economic growth for this year, with a downward revision in the economic growth forecast to 3.4% from 3.5% previously.
Inflation has also been revised slightly upwards, from an average rate of 4.7% in 2011 to 4.9%, an average rate previously of 5% for 2012 to 5.2%, and an average rate previously of 5.2% in 2013 to 5.5%.
The higher upward revision of inflation for 2013 suggests inflation may break the upper limit of the 6% target range set for the Reserve Bank in 2013.
However, Gordhan said in his speech that inflation is forecast to remain within the target range of 3% to 6%, edging towards the upper end of the range in 2013 as the economy strengthens.
Increasing food and oil prices represented risks to the inflation outlook. The price of Brent crude reached $107 the day before the budget speech.
“Further increases will put upward pressure on prices more broadly,” he said.
Gordhan noted that the economy had grown by 2.8% in 2010. Strong commodity prices, low interest rates and faster global growth had been the main forces behind the economic recovery.
Improving household consumption and accelerating investment would support an increase in economic growth over the medium term. Real gross domestic product growth would reach 3.4% in 2011, 4.1% in 2012 and 4.4% in 2013.
Globally, the economic recovery was two-speed. “There is moderate growth in the United States and parts of Europe again, whereas China and many other emerging economies continue to expand rapidly,” Gordhan said.
Other risks were overheating in emerging markets and volatile capital flows.
Despite this week’s upbeat growth figures, Finance Minister Pravin Gordhan is slightly less optimistic about economic growth for this year, with a downward revision in the economic growth forecast to 3.4% from 3.5% previously.
Inflation has also been revised slightly upwards, from an average rate of 4.7% in 2011 to 4.9%, an average rate previously of 5% for 2012 to 5.2%, and an average rate previously of 5.2% in 2013 to 5.5%.
The higher upward revision of inflation for 2013 suggests inflation may break the upper limit of the 6% target range set for the Reserve Bank in 2013.
However, Gordhan said in his speech that inflation is forecast to remain within the target range of 3% to 6%, edging towards the upper end of the range in 2013 as the economy strengthens.
Increasing food and oil prices represented risks to the inflation outlook. The price of Brent crude reached $107 the day before the budget speech.
“Further increases will put upward pressure on prices more broadly,” he said.
Gordhan noted that the economy had grown by 2.8% in 2010. Strong commodity prices, low interest rates and faster global growth had been the main forces behind the economic recovery.
Improving household consumption and accelerating investment would support an increase in economic growth over the medium term. Real gross domestic product growth would reach 3.4% in 2011, 4.1% in 2012 and 4.4% in 2013.
Globally, the economic recovery was two-speed. “There is moderate growth in the United States and parts of Europe again, whereas China and many other emerging economies continue to expand rapidly,” Gordhan said.
