Page 22 - Demo

Estimates of the Provincial Revenue and Expenditure (EPRE) %u2013 2025/26 Financial Year1 SOCIO- ECONOMIC OUTLOOK Introduction Current population and household level data from Stats SA provides some high-level overview of the development gains and gaps for the province. Over the past three decades there has been considerable progress in service delivery and provision of access to basic services by households. However, key challenges remain to be the spatial inequities and underdevelopment that persist. For the province, significant share of the population still resides in previously underdeveloped parts exerting additional strain on current infrastructure and provision of new infrastructure. In relation to the economy, following its brief recovery in 2022, domestic economic activity slowed down to 0.7 per cent in 2023 due to major disruptions in rail and ports operations. The slowing pace spilled over to 2024, driven by lower private sector investments, and the subsequentdroughts and animal disease outbreaks that affected the agriculture sector in the latter half of the year. Noting this situation the National Treasury has since revised down the short-term growth projections for 2025 to 1.4 per cent for the country. However, for 2026 and 2027, current consensus points to a gradual domestic recovery, averaging at 1.7 per cent per annum. The anticipated near-term recovery will be supported by steady improvements in electricity supply and ports operations, ramping up of public investments for infrastructure and maturing political institutions to respond to policy uncertainties. All combined, these factors will bolster business confidence and propel private investment. The monetary policy will also be expected to remain stable over the near term as the domestic inflation outlook improves. The easing of borrowing costs will be encouraging growth in household consumption whilst labour market conditions improve. At the global level the most pressing challenges relate to fragmenting and intensifying protectionist trade policies between regional blocks and countries, lingering geopolitical tensions, policy uncertainties on climate change responses, and multilateral institutions in flux. Furthermore, bilateral tensions between the United States (US) and South African has resulted in foreign aid reduction for HIV/Aids programmes, and may likely lead to the country departing from the African Growth and Opportunity Act (AGOA). However, South Africa has signed an investment pact worth R94 billion with the European Union focussing on clean energy, vaccine manufacturing and digital and physical connectivity. 1.1 Eastern Cape: Demographic Profile Population estimates Population growth represents both benefits and challenges for development and it significantly affects government service delivery, employment opportunities, and key economic indicators like per capita income at both provincial and national levels. According to the recent 2022 Census conducted by Statistics South Africa, the national economy has a population of 62.0 million, whilst the Eastern Cape remains the fourth largest province recording a population of 7.2 million (a growth of 0.7 million as compared to the past decade). In addition, the 2024 Mid-Year Population Estimates also published by Statistics South Africa provides annually updated population estimates and patterns closely aligned and similar to the recent 2022 Population Census. 1