National Development Plan - Economics Research Assignment

SYNDICATE ASSIGNMENT

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Table of Contents

1. Introduction        2

National Development Plan        2

2. Is the National Development Plan likely to reach the 2030 target?        3

Economic Growth        3

GDP and Business Cycle Analysis (2016-2018)        3

2016 GDP Analysis        4

2017 GDP Analysis        5

2018 GDP Analysis        5

Business Cycle Overview        5

Unemployment and Labour Participation Rates        7

GDP Income Per Capita        8

Summary of the economic performance        8

3. What is the primary industry likely to achieve the desired growth?        9

The Primary Industry Likely to Achieve Growth - Mining        9

Accelerated Economic Growth        9

Labour-absorption        10

Comparative Clusters        10

Recommendations        12

4.        Monetary and Fiscal Policies in South Africa        14

Monetary Policy        14

Fiscal Policy        16

5.        The Role of additional factors        17

State Owned Enterprises        17

Ecological factors        18

Labour Unrest        18

6.        Summary        18

7.        Recommendations        19

8. References        20

1. Introduction 

National Development Plan

The National Planning Commission (NPC) released the plan and vision for 2030 on 11 November 2011 known as the National Development Plan (NDP). Parliament approved and adopted the plan which would aim to achieve economic prosperity through strong growth in Gross Domestic Product (GDP), reduction in corruption, unemployment inequality and poverty, improvement in healthcare, infrastructure and education for all South Africans by 2030.

According to the World Bank, “South Africa’s fiscal deficit and debt indicators show that the fiscal space to spend more to achieve even greater redistribution is extremely limited. Addressing the twin challenges of poverty and inequality going forward in a way consistent with fiscal sustainability will require better quality and more-efficient public services. It will also require faster and more-inclusive economic growth…to reinforce the effectiveness of fiscal policy.” (National Development Plan: The Outlook in 2016, 2016).

This report aims to critically analyze the above statement, taking in to account the following:

1. South Africa’s economic growth and the business cycle over the last three years and whether the NDP is likely to reach its 2030 target.
2. The primary industry which is likely to achieve the NDP’s growth targets.
3. The recent state of South Africa’s Fiscal and Monetary Policy.
4. What role do other factors play, such as drought, labour unrest, power outages, the dire financial condition of SOEs (State-Owned Enterprises) and domestic market structures in achieving the NDP’s 2030 targets.

2. Is the National Development Plan likely to reach the 2030 target?

The NDP set several economic and employment objectives which are fundamental to the achievement of the 2030 vision. This section analyses the business cycle from 2016 to 2018 including the performance of the South African GDP across this period. A qualitative assessment has been conducted to compare the actual performance of the country against the projected position at current rates of growth. Furthermore, benchmarking these figures against the NDP 2030 projected targets.

The selected economic and employment objectives are as follows;

1. The unemployment rate should fall from 24.9 percent in June 2012 to 14 percent by 2020 and to 6 percent by 2030;
2. GDP should increase 2.7 times in real terms, requiring average annual growth of 5.4% over the period.
3. raise per capita income from R50 000 in 2010 to R110 000 by 2030;
4. increase labour force participation rates from 54 percent to 61 percent.

Economic Growth

To determine whether it is likely that the NDP will achieve its targets by 2030 we have investigated the past performance of the South African (SA) economy placing attention on GDP performance, the last 3 years business cycle (2016-2018) and the state of employment. In addition to the above we shall give a brief analysis on some of the key areas and milestones of the NDP and corresponding factors in the achievement of NDP’s 2030 target.