Speaking at AfriSam’s recent National Budget Breakdown function, an annual event now in its fifth year, Dr Azar Jammine, director and chief economist of Econometrix, gave a thumbs up to the 2022 budget, saying it was “highly satisfactory with no harm.”
Howeverm he cautioned that servicing the national debt was becoming increasingly onerous and now accounted for 14 per cent of government expenditure. He also expressed the view that there was nothing in the budget "to make one believe sustainable growth will improve forthwith."
Trevor Manuel, who served as South Africa’s Minister of Finance from 1996 to 2009, provided valuable and insightful commentary, based on his intimate knowledge and experience. Reviewing the global economy, Jammine said it had grown by 5.9 per cent in 2021 with the IMF predicting that this figure would fall to four per cent in 2022 and 3.8 per cent in 2023. By contrast, South Africa had shown 4.6 per cent growth in 2021, well below the global average, with the IMF forecasting that this would drop to 1.9 per cent in 2022 and a paltry 1.4 per cent, the lowest of any major economy, in 2023.
Turning to some of the specifics of the South African economy, Jammine said construction had been the weakest sector of the economy over the past decade and now accounted for just 2.5 per cent of GDP. This was due to gross capital formation in South Africa having declined, as a percentage of GDP, from 19 per cent around 2014 to the current 13 per cent.
Concluding his presentation on a positive note, Jammine said the construction industry could receive a big boost from an increase in infrastructural spending. He noted that 51 well-defined projects worth ZAR340bn (US$22.18m) had been identified in the 2020 Economic Recovery and Construction Plan and that the project pipeline has since been expanded to include an additional 55 projects worth ZAR595bn.
This amounted to a grand total of ZAR935bn representing 126 per cent of total annual fixed investment. He said that if all, or even just some, of these projects were implemented it would be a game changer for the industry and a major boost to the economy, with growth increasing by as much as two per cent a year.
From left, Richard Tomes, sales and marketing executive at AfriSam; South Africa’s longest serving former finance
minister, Trevor Manuel; Dr Azar Jammine, director and chief economist of Econometrix and, Dr Azar Jammine,
director and chief economist of Econometrix and AfriSam's executive chairman and CEO, Erick Diack
