GDP growth rate
1. GDP growth rate is maintained at 3.2%, as forecasted in September 2013. Exclusive of sugar, the growth rate would be 3.3%, same as forecasted earlier.
At industry level, the main changes compared to the forecast made in September 2013 are:
(i) Sugarcane: a negative growth of -1.3% instead of 2.0 % based on a forecast of 407,000 tonnes of sugar instead of 420,000 tonnes.
(ii) Manufacturing: to grow by 3.0% instead of 2.7%. This is mostly explained by better performance of “Other manufacturing” (7.0% as opposed to 5.5%), partly offset by lower performance of “Food processing” (1.0% rather than 1.2%).
(iii) Wholesale and retail trade: to grow by 3.3% instead of 3.5% based on available imports data for the first nine months of 2013.
(iv) Accommodation and food service activities: to grow by 3.5% as opposed to 2.5% based on a revised tourist arrivals forecast of 1 million instead of 990,000.
(v) Information and communication: a growth of 7.1% rather than 7.7%, as forecasted earlier.
(vi) Financial and insurance activities: to grow by 5.4% instead of 5.3%, mainly due to better performance of “Insurance, reinsurance and pension” industries.
Consumption and Saving
2. Final consumption expenditure of households and government would grow by 2.4%, lower than the figure of 2.8% in 2012. Saving rate defined as the ratio of GNS to GDP at market prices, would reach 14.0%, lower than the figure of 15.1% in 2012.
3. Total investment would continue to drop and is expected to contract by -4.3% in 2013 after the -0.8% fall in 2012. Exclusive of aircraft and marine vessels, a decline of -6.9% is expected.
(i) Private sector investment would contract further by -4.1% in 2013 after a drop of -1.9% in 2012. Exclusive of aircraft and marine vessels, private investment would decline by -7.4%.
(ii) Public sector investment would decline by -4.9% in 2013 after a rebound of 2.9% in 2012. Excluding aircraft and marine vessels, a fall of -5.1% would be observed.
(iii) Investment rate, defined as the ratio of investment to GDP at market prices is anticipated to drop to 21.0% from 23.0% in 2012. Exclusive of aircraft and marine vessels, the rate would be 20.5%.
(iv) Private investment rate would decrease to 16.0% from 17.5% in 2012 and that of public investment rate to 5.0% from 5.5%. Exclusive of aircraft and marine vessels, private investment rate would be 15.5% and that of public 5.0%.
4. On basis of information gathered on key sectors of the economy and assuming the same implementation rate as in 2013 for measures announced in the last budget regarding public investment projects, GDP for 2014 would grow by around 3.7%, higher than the 3.2% growth in 2013. Exclusive of sugar, the growth rate would be 3.8% compared to 3.3% in 2013.
The main assumptions used for the forecast of 3.7% growth are:
(i) Sugarcane: sugar production of 410,000 tonnes of refined and special sugars, resulting in a growth of 0.6% compared -1.3% in 2013.
(ii) Manufacturing Industries: to expand by around 2.6%, lower than the 3.1% growth of 2013. Within the sector,
a. “Sugar milling” to grow by 1.0% after a fall of -0.6% in 2013;
b. “Food processing” to grow by 3.5% taking into account the operation of a new fish processing plant in 2014 compared to 1.0% in 2013;
c. “Textile” to grow by 2.0%, same as in 2013. The 2.0% forecast is based on assumptions of sustained recovery in our main markets and diversification of regional markets; and
d. “Other manufacturing” to expand by 2.0%, lower than the 7.0% growth in 2013.
Activities of Export Oriented Enterprises (EOE) are expected to rebound by 1.5% compared to the fall of -0.9% in 2013.
(iii) Construction: to decline by -2.0% after the contraction of -9.4% in 2013, assuming the same implementation rate as in 2013 for public projects announced in the last budget and a drop in major private construction projects.
(iv) Accommodation and food service activities: a growth of 2.6% based on tourist arrivals forecasted at around 1,025,000 in 2014, compared to 3.5% in 2013. Tourist earnings are forecasted at R 44.5 billion against R 41.5 billion in 2013.
(v) Financial and insurance activities: to grow by 5.2%, lower than the 5.4% growth expected in 2013.