South Africa has weathered the storms of the past year and is poised for rapid growth, the country's finance minister believes.

Speaking to reporters at a Commonwealth tax conference, Trevor Manuel was even more bullish about the prospects for the economy than he had been in his medium-term Budget statement in October.

"Circumstances have changed... even since October," he said.

"I am exceedingly optimistic about the changed circumstances.

"We will be in a position to indicate stronger macro-economic variables including a significantly improved growth forecast in the February Budget."

Good news

October's statement had foreseen 2.6% growth for 2002, up from February's prediction of 2.3%, with 2003 bringing an expansion of 3.5% and 2004 growth of 3.7%.

Even those figures are felt by many economists to be optimistic, given the gloomy outlook for the world economy and South Africa's dependence on exports for more than a third of output.

But Mr Manuel pointed to the recent strengthening of the rand as an example of changing economic circumstances.

After a desperate 2001, which saw South Africa's currency slide 38%, as fears grew over instability in neighbouring Zimbabwe, this year has seen the currency recover most of the lost ground.

The past month has also produced a flattening of inflation, allowing the Reserve Bank to forgo an interest rate rise from the current 13.5%.

And the trade surplus ballooned to 4.8bn rand in October on rising coal and steel exports, suggesting that possible negative effects stemming from the rising rand could be under control.

Threats

But Mr Manuel also acknowledged that there could still be some nasty surprises in store.

The drought ravaging neighbouring countries such as Zimbabwe, Mozambique, Lesotho and Swaziland could yet hit South Africa.

And the El Nino weather effect is building up, threatening to disrupt traditional weather patterns over the next three to six months.