South Africa economic growth forecast slashed

South Africa's new finance minister has his work cut out

South Africa has downgraded its economic growth, but the country's new finance minister pledged to keep a tight rein on government spending.

Nhlanhla Nene told parliament in his medium-term budget statement that economic growth would only be 1.4% this year.

GDP growth was earlier forecast at 2.7% in the full budget back in February.

South Africa suffered a prolonged strike on its platinum mines earlier this year.

Meanwhile, the budget deficit was forecast at 4.1% for this fiscal year, compared with a previously predicted figure of 4%.

"The weak economic performance has put a great deal of pressure on the fiscus, with revenue insufficient to cover expenditure," Mr Nene said in his speech.

Economists were looking for some hints at government spending cuts, as more than half of the national income goes on welfare payments and the public sector wage bill.

In the event, Mr Nene said there would be a reduction in the rate of the growth of government spending, but not a cut.

As such, he said an additional revenue of 15bn rand ($1.36bn) a year would need to be raised.

In his speech, Mr Nene hinted at possible privatisation of certain state assets, but did not actually use the word itself.

"In some instances, government will dispose of non-strategic assets to raise resources for financial support," he said.

Some of the proceeds from the sale of "non-strategic" assets would go towards propping up the state-run electricity company, Eskom.

South Africa's economy has suffered somewhat of late. Industrial action has reduced output from the country's platinum mines and the weak rand has failed to stimulate exports.

The economy, which has also been overtaken by Nigeria as the continent's largest, was also subjected to downgrades from the ratings agencies.