S. African economic growth forecast to grow 0.5 pct this year

South Africa's economic growth will be just 0.5 percent this year, lower than the February estimate of 0.9 percent, Finance Minister Pravin Gordhan said on Wednesday.

Growth will be rising to 1.7 percent in 2017, Gordhan said while delivering the 2016 Medium Term Budget Policy Statement speech in Parliament.

"With appropriate policies in place we will see the recovery strengthen more rapidly," he said.

Though investment has still to gain momentum, there have been a number of expansion projects announced in mining and manufacturing this year, he said.

"If we do the right things to support investment and confidence, our economic recovery will be more rapid," he said.

Measured and balanced fiscal consolidation will continue over the period ahead, with the budget deficit declining from 3.4 percent this year to 2.5 percent in 2019/20, said Gordhan.

Debt is projected to stabilize at just less than 48 percent of GDP, he said.

Consolidated government expenditure will rise by 7.6 percent a year over the MTEF (Medium Term Expenditure Framework) period.

Infrastructure investment, mainly in energy, transport and telecommunications, will amount to over 900 billion rand (about 64.7 billion dollars) over the next three years.

"The economic environment this year is unusually difficult. We have also faced other extraordinary challenges," Gordhan said.

Slow economic growth means that employment has declined over the past year. Many businesses are in difficulties and households are struggling to make ends meet.

"In the lead-up to this year's Medium Term Budget Policy Statement, we have been acutely aware of the depth of these stresses, and the diverse interests and expectations of South Africans," Gordhan said. Endit