The South African economy has averaged 3,2% growth over the past four years, while continued expansion of between 4% and 4,5% is anticipated over the next three years, indicating a significant step-change in the pace of economic growth, Finance Minister Trevor Manuel said yesterday.

Delivering his 2005 National Budget speech in Parliament, Manuel pointed out that the country has also seen consumer price inflation fall to 4,3% for the year to December 2004, and it is expected to remain comfortably within the 3% to 6% target range over the period ahead.

“This is a marked improvement on the position we were in a decade ago. It is the fruit of sound macroeconomic performance and monetary management, improved competitiveness, structural reform and a fiscal policy framework designed to underpin sustainable growth and investment. Real income per person over the past decade has increased by 15%,” he added.

Manuel also pointed out that, with growth projected at over 4% a year over the period ahead, real per capita income is expected to rise by at least 30% in the second decade of the country's democracy.

According to National Treasury data, most sectors of the economy grew strongly during 2004, with the fastest growth recorded in the retail, construction, financial services, transport and communication sectors.

While the strong rand placed several sub-sectors under pressure, the strong growth in most sectors, and labour-intensive sectors in particular, resulted in net employment gains last year.

“Over the past decade, we have laid the macroeconomic and fiscal foundations on which increased investment and a stable business environment rest. In years ahead, we must see more rapid expansion in the productive capacity of our businesses, creating jobs for work-seekers, while also growing the revenue base that makes possible an expanded envelope on public services,” Manuel stated.

He argued that government must also confront the challenge of making economic growth pro-poor.

“As we step up the pace of investment in modern transport, communication, water and energy networks, we need to ensure that we build a more efficient economic landscape, that we contribute to more balanced development between suburbs and townships, between urban and rural areas and between the first and second economies. We need to press more urgently on the labour-absorbing potential of infrastructure and building programmes.” In terms of the country's economic outlook, Manuel commented that several fundamental strengths indicate further upward momentum in South Africa's economic growth performance over the next three years.

Changes in the economic outlook, he said, arise partly from changes in the global or domestic market environment.

“But at least two critical areas of economic performance are firmly within the scope of our influence and responsibility. I refer to the need to accelerate the pace and quality of infrastructure investment, partly a responsibility of government departments and partly of our major parastatals, and to the need to address deficiencies in municipal planning and service delivery and in the regulatory and administrative environment that impede business development and job creation,” he pointed out.