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Cape Town - It is still too early to tell whether or not SA will achieve 4% growth in GDP this financial year, according to Finance Minister Trevor Manuel, but he said on Monday that he was comfortable that GDP growth would average 4% during the calendar year of 2008.
He told a parliamentary questioner in a written reply that though GDP growth decelerated sharply to 2.1% in the first quarter of 2008, the deceleration was largely the result of a 22.1% decline in mining output (due to the mining closures in January)."When the negative impact of mining is excluded," he said. "GDP still grew by 3.6% during the first quarter."
He calculated that if the economy should register no further growth (0%) during the course of the year, annual growth will still be 2.4%.
"Should GDP growth average just 3.0% over the next three quarters, GDP growth for calendar 2008 will be 3.5%," he said.
He added that he expects a strong, even though temporary and artificial, rebound in growth in the second quarter of the year as projects initiated by Eskom to reduce electricity demand and stabilise the national grid should have a significant positive impact on second quarter GDP of the mining and electricity sectors in particular.
Growth
"Furthermore, one positive spin-off from the current high food prices is a strong agricultural output response," he said. "In the first quarter of this year, agricultural output increased by 12.5%. If favourable weather conditions are maintained, agricultural output is likely to continue to support growth going forward.
"In addition, growth will be supported by the public sector
infrastructure investment, which is expected to rise by an average annual growth rate of 19.2% over the MTEF (medium-term expenditure framework).
Private investment, which rose by 14.8% in 2007, is also expected to remain strong, supported by high commodity prices and plans to expand domestic capacity."
The minister told his questioner, Kobus Marais of the Democratic Alliance that the 2010 soccer World Cup would also stimulate investment over the next two years.
"To conclude," he said: "Given a sharp rebound in second quarter growth (related to mining and electricity), and a continued strong performance by the agricultural sector, as well as strong investment by both public and private sectors, we remain confident that even with economic activity weakening (slightly) in other sectors, growth for the calendar year 2008
will still be strong."
The minister also told Marais that government could not just blindly implement any set of recommendations, without first conducting debate and discussion on the recommendations of the international growth advisory panel (IGAP), often called the Harvard group.
He said: "We will announce our initial response to the recommendations within the next few months, but the discussions and debates will continue and will hopefully complement Asgisa thereafter."
- I-Net Bridge