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Johannesburg - The effects of UK's exit from the European Union (EU) will only be felt next year, Finance Minister Pravin Gordhan said on Tuesday.
Gordhan told a SA Chamber of Commerce and Industry event in Johannesburg that, although he expects Brexit to have an impact on the global economy and South Africa, government was putting plans in place to weather the storm.
"We are living through a very turbulent, volatile, and uncertain global time. Brexit and all the uncertainty it creates economically, both in Europe and elsewhere in the world... will only play itself out in the next year or so as we begin to understand how the negotiation process between the EU and the UK begins to unfold," he said.
Gordhan said government, business and labour needed to ask tough questions to ensure the country builds on its own strengths.
"In the current global environment, we don’t have a very encouraging and supporting context. The message, as government we have been giving and exchanging with our partners in business, is that we as SA need to build on our own strengths, understand where our own competitive advantages are and [do] some hard work which will take our growth numbers above what the International Monitory Fund [predicts] we will produce in 2016 at 0.1% growth."
Gordhan said this could be done by leveraging on strong institutions and the well-developed capital markets which had kept our international borrowing at 10%.
"Much of our borrowing is done internally. We have set a limit of 10% in terms of foreign borrowing. This is were there has been a great deal of foresight by Treasury."
He added that volatility in the financial markets, where every bit of news moves the markets in one way or the other, had also put a strain on the country's markets.
"We see that lower commodity prices and a lower demand in commodity prices has impacted a number of economies in developing countries. The room in most economies for fiscal and monitory stimuli is fairly narrow and that applies in our country as well," he said.
He said one of the government's major challenges going forward was its long-term investment on infrastructure development.
"One of the challenges we have is that we are investing huge amounts of investment in infrastructure, it takes some for that infrastructure to have positive reviews in the economy.
"We build power stations over long periods of time, but they don't generate power immediately, it takes years before power goes online and [they] generate [for the] economy."
Britain voted to leave the European Union on June 24. The rand then plunged far more than the day President Jacob Zuma fired former finance minister Nhlanhla Nene.
