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Economic growth is set to strengthen in 2018-19, driven by increased business and consumer confidence. A favourable outlook in trading partners will benefit exports. Private consumption will expand, albeit at a slightly lower rate than in 2017 due to tax increases. Employment trends remain a concern.
Inflation is projected to remain in the target range, reflecting an assumed stable strong exchange rate, which lessens the effect of higher international oil prices and thus the upward pressure from the VAT hike. Monetary policy is projected to be moderately expansionary, which is appropriate to support growth. The government budget for 2018-19 remains tight, but tax reforms will create some fiscal room for much needed investment in higher education and social benefits. Once the fiscal situation improves, government debt reduction needs to be advanced. Network regulation reforms aimed to broaden competition can further support growth.
Economic Survey of South Africa (survey page)