Light at the end of the tunnel
While the primary focus of the 2021 Medium-Term Budget Speech was the government ’ s plan to narrow the budget deficit and achieve a surplus by 2024 / 2025 , property sector insiders welcomed the news that the country ’ s economic growth outlook has improved .
Thankfully Finance Minister Enoch Godongwana has not announced any tax hikes or adjustments in the shortterm , as rising tax has played a major role in high-net-worth individuals leaving the country and taking their business operations offshore , which has been a serious blow to both the residential and commercial property sector ,” comments John Jack , CEO of Galetti Corporate Real Estate .
Chief Economist of the Efficient Group , Dawie Roodt said that Godongwana set the right tone with a more conservative approach to the budget . “ The minister made it clear that he wants to stay within the fiscal framework . That means he would need to consolidate state finances over the next couple of years , and inevitably cut back on state spending in real terms relative to the size of the economy .”
FNB Property Economist , John Loos says : “ For 2021 , FirstRand projected GDP growth of about 4.7 %, followed by a slower 2.2 % in 2022 . This means that actual GDP level only likely returns to its pre-COVID 2019 level next year .
He adds : “ The reasoning behind expecting such a slow return to pre- COVID 19 levels of economy-wide production is twofold . Firstly , a portion of the production capability of the economy has been wiped out due to certain businesses closing their doors permanently due to last year ’ s deep recession .
Secondly , many businesses that survived the lockdowns took a major blow to their finances and to their management ’ s confidence , and as such won ’ t be rushing to invest in capacity expansions to fill the void left by competition that is no longer there . Business , and thus investor , confidence will come back slowly at best .”
CEO of Pam Golding Property Group , Dr Andrew Golding comments : “ In addition to reassuring the markets that the government remains committed to fiscal restraint , the Finance Minister provided a strong focus on the critical need to push ahead with the long-
2 NOV 2021 SA Real Estate Investor Magazine