CAPE TOWN, Feb. 21 (Xinhua) -- South Africa's economy is estimated to have grown by 0.6 percent last year and will increase to 1.6 percent over the next three years, Finance Minister Enoch Godongwana said here Wednesday.

He made this revelation while delivering the 2024 Budget Speech in Cape Town, the legislative capital of South Africa.

Godongwana noted in his speech that despite the improved global outlook for 2024, South Africa's near-term growth remained hamstrung by lower commodity prices and structural constraints.

"We estimate real GDP growth of 0.6 percent in 2023. This is down from 0.8 percent growth estimated during the 2023 Medium Term Budget Policy Statement," said Godongwana.

The revision was due to weaker-than-expected outcomes in the third quarter of 2023, particularly in household consumption and fixed investment.

Despite this, "between 2024 and 2026, growth is projected to average 1.6 percent," Godongwana said. "The growth outlook is supported by the expected easing of power cuts as new energy projects begin production, and as lower inflation supports household consumption and credit extension."

"But, there are also risks to the domestic outlook. These include persistent constraints in electricity supply, freight rail, and ports, and high sovereign credit risk. Our challenge ... is that the size of the pie is not growing fast enough to meet our developmental needs," he said.

The finance minister also said the budget deficit for the financial year 2023/2024 was estimated to worsen from 4 percent a year ago to 4.9 percent of GDP.

"The deficit will begin to improve from 2024/2025 to an estimated 4.5 percent of GDP, reaching 3.3 percent by 2026/2027," Godongwana said. "Debt will now peak at 75.3 percent of GDP in 2025/2026."

To address challenges that have held back the country's economic growth, Godongwana said the government has embarked on a broad structural reform agenda.

"This agenda has included areas like electricity, logistics, water, telecommunications, and visa reforms," he added.