While National Treasury has revised down the South African economy’s growth to 1.5% in 2019, forecasts for the years ahead, see far healthier position for the country’s economy.
In the 2019 Budget Review document on Wednesday, Treasury said Gross Domestic Product (GDP) has been revised down since the Medium Term Budget Policy Statement (MTBPS) tabled in October 2018.
The document attributed the drop in forecast from the 1.7% tabled at the MTBPS to 1.5% – to a fragile recovery in employment and investment, and a less supportive global trade environment.
“The weaker outlook projects a slow improvement in production and employment following poor investment growth in 2018, and a moderation in global trade and investment. The medium-term outlook is subdued, with GDP growth projected to reach 2.1% in 2021, supported by a gradual improvement in confidence, more effective public infrastructure spending, and a better commodity price outlook than previously assumed,” noted the document.
This as South Africa’s GDP growth slowed from 1.3% in 2017 to an estimated 0.7% in 2018.
However, according Oxford Economics, 10 emerging markets will dominate the global economy in the next decade, including South Africa.
Oxford Economics forecasts the fastest growing emerging market economies to 2028, based on analysis of the key drives of capital deepening and total factor productivity growth. It has South Africa as the 10th fastest growing EM, at 2.3%.
A PwC report, meanwhile, sets out our latest long-term global growth projections to 2050 for 32 of the largest economies in the world, accounting for around 85% of world GDP. This also includes South Africa.
The world economy could more than double in size by 2050, far outstripping population growth, due to continued technology-driven productivity improvements. Emerging markets could grow around twice as fast as advanced economies on average, PwC said. As a result, six of the seven largest economies in the world are projected to be emerging economies in 2050 led by China (1st), India (2nd) and Indonesia (4th).
The US could be down to third place in the global GDP rankings while the EU27’s share of world GDP could fall below 10% by 2050.
The UK could be down to 10th place by 2050, France out of the top 10 and Italy out of the top 20 as they are overtaken by faster growing emerging economies like Mexico, Turkey and Vietnam respectively.
By 2050, China will not only have overtaken the US but its economy will be much larger. According to the PwC report, its GDP will stand at around $58.5 trillion compared to the US’ $34.1 trillion. The Asian giant will account for 20% of the world’s economy, higher than India at 15% and the US at 12%.
South Africa is one of three African countries that feature in the top thirty of 2050, along with Nigeria (14) and Egypt (15).
- 27. South Africa — $2.570 trillion
- 15. Egypt — $4.333 trillion
- 14. Nigeria — $4.348 trillion
- 5. Brazil — $7.540 trillion
- 4. Indonesia — $10.502 trillion
- 3. United States — $34.102 trillion
- 2. India — $44.128 trillion
- 1. China — $58.499 trillion