Budget Speech 2014

As global economic growth recovers there will be opportunities and risks for our economy. These developments have the potential to increase our exports.

Among our emerging market partners, growth remains strong but demand for mineral products has moderated and is unlikely to pick up soon. The prices of our largest sources of foreign earnings remain depressed.

However, the rand remains an effective shock absorber against global volatility. Recent movements of the currency have been supportive of export growth while reducing the country’s reliance on capital inflows.

We must ensure that our fiscal and monetary choices keep inflation low and maintain the recent gains in competitiveness. While we have made significant progress in accumulating reserves, there is scope for further improvement. This will support the stability of the currency.

We project growth to increase from 2.7 per cent this year, to 3.5 per cent in 2016. Investment is forecast to increase by about 5 per cent a year and the current account deficit will average 5.8 per cent of GDP over the medium term, while consumer price inflation will return to levels within the target band between 2015 and 2016.

Potential domestic risks to the outlook include further delays to the introduction of new infrastructure, particularly additional electricity capacity, higher inflation due to the weakness of the rand, and protracted labour disputes which could depress consumer and business confidence.