S. Africa May Cut GDP Forecast to as Low as 2%: Gordhan

South Africa will probably cut its economic growth forecast for this year to as low as 2 percent as mining strikes and a recession in Europe curb exports, Finance Minister Pravin Gordhan said.

Africa’s largest economy may expand 2 percent to 2.2 percent in 2013, lower than a February estimate of 2.7 percent and down from 2.5 percent expansion last year, Gordhan said in an interview with Bloomberg TV in Moscow today.

“Growth is likely to be lower,” he said. “We will have to accommodate our spending patterns in line with what our revenue picture shows.”

The government is limiting spending for the next three years as strikes in the mining industry and slumping demand from Europe for manufactured exports reduces revenue. Gordhan pledged in his February budget to narrow the fiscal deficit to 4.6 percent of gross domestic product in the year through March 2014 from an estimated 5.2 percent last year.

The Reserve Bank yesterday cut its GDP growth forecast to 2 percent from 2.4 percent and kept its benchmark lending rate at 5 percent, the lowest level more than 30 years. The rand has weakened 14 percent against the dollar this year, threatening to boost inflation. The currency gained 0.4 percent to 9.8944 per dollar by 10:45 a.m. in Johannesburg.

To contact the reporters on this story: Andres R. Martinez in Johannesburg at amartinez28@bloomberg.net; Ryan Chilcote in London at rchilcote@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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