Johannesburg  - South African Finance Minister Trevor Manuel said Tuesday he was confident the country would ride out the international financial storm and announced a increase in government spending, while predicting slower growth.

Presenting his annual medium-term budget policy statement, Manuel said: "The storm has arrived, it is fiercer than anyone could have imagined, and its course cannot be predicted. But we saw the signs early and we took appropriate action. We can say to our people... the thunder will pass."

Although more affected by the turmoil in international markets than most poorer African countries, South Africa has not been as hard hit as other emerging markets, such as Russia or India, in part because of strict banking regulations.

But a widely-feared global recession resulting in falling demand for commodities such as platinum and iron ore, which South Africa produces. and increased protectionism in northern markets will likely lead to a slowdown in the strong growth of the past decade.

Manuel, South Africa's finance minister the past 12 years, said he expected export revenue to fall and gross domestic product to reach 3.7 per cent this year, down from an average of 5 per cent a year over the past five years.

But, despite an expected dip in tax receipts, government will spend 171 billion rand (17 billion dollars) more over the next three years than provided for in the February budget on creating more jobs, improving pensions, healthcare and other social services.

In a sign that the sense of crisis engulfing leading economies has yet to reach South Africa, Manuel also granted MPs a hefty salary increase.

Manuel, whose prudent macroeconomic policies over the past decade are credited with securing the country's finances, had been under pressure to announce a generous budget after posting several budget surpluses. (dpa)