The Free State’s low contribution to the growth of South Africa’s Gross Domestic Product (GDP) is envisaged by the MEC for Economic, Small Business Development, Tourism and Environmental Affairs to persist.
This is informed by findings MEC Thabo Meeko presented as part his maiden budget vote delivered on 21 April.
Economic stagnation has seen the province’s contribution drop below 6%, thus limiting real prospects of sustainable employment and job creation.
“The province’s economy is expected to grow at an annual average rate of 1,45% until 2026 and will still contribute 4,9% to the country’s GDP,” said Meeko.
“Between 2011 and 2021, the Free State’s economy grew at an average rate of 0,46% and in the same period contributed 4,9% to South Africa’s GDP. This was a decrease from 5,1% in 2011. In 2022 the Free State’s contribution was at 5,0%, or R332 billion.”
The Free State offered the second lowest contribution to GDP compared to the other eight provinces – following the Northern Cape, at 2%.
Meeko revealed that Gauteng had contributed 35% (R2,33 trillion) to the country’s GDP; KwaZulu-Natal 16% (R1,04 trillion); the Western Cape 14% (R911 billion); Mpumalanga 8% (512 billion); the Eastern Cape also 8% (503 billion); Limpopo 7% (R482 billion); and North West 6% (R391 billion).
Meeko’s forecast came against the backdrop of the International Monetary Fund (IMF) forecast.
The international organisation of 190 countries works to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
The IMF stated that a recovery in the South African services sector had supported job creation in 2022, but strongly warned that employment remained below pre-pandemic levels and unemployment close to record highs, on the back of already high poverty and inequality.
Meeko revealed that the community services sector had been the largest within the Free State economy, accounting for 27% of the total Gross Value Added (GVA).
“This was followed by the finance sector at 20%; the trade sector at 12,5%; manufacturing and mining both at 10%; transport at 8%; agriculture at 6,8%; electricity at 3,4%; and construction at 1,6%,” he said.
South Africa is further hamstrung due to being greylisted by the Financial Action Task Force (FATF), an intergovernmental body that sets global standards in the combatting of money laundering and terrorist financing.
