THE International Monetary Fund (IMF) has revised down South Africa’s economic growth forecasts for this year and next year, warning that strikes, policy uncertainty and several other obstacles in sub-Saharan Africa are weighing on growth.
In its latest World Economic Outlook report, released yesterday, the IMF slashed South Africa’s economic growth outlook for this year to 2.3% from an earlier forecast of 2.8%.
The growth outlook for next year was revised to 2.7% from an earlier forecast of 3.3%.
“In South Africa, growth is forecast to rise moderately, driven by improvements in external demand, but risks are to the downside,” the report said.
The IMF expected the sub-Saharan African economy to grow 5.4% this year and 5.5% next year, from 4.9% last year. These higher economic growth rates would reflect positive domestic supplyside developments and the strengthening global recovery, the IMF said.
“Growth in sub-Saharan Africa remains robust and is expected to accelerate in 2014,” it said.
It warned, however, that tight global financing conditions or a slowdown in emerging-market economies could generate external headwinds, especially for middle-income countries with substantial external links, such as South Africa, and producers of natural resources.
Emerging-market currencies depreciated significantly earlier this year when the US Federal Reserve began the tapering of its quantitative easing programme, which had seen it pump billions of dollars into its financial markets to stimulate economic activity.
The IMF warned that while such global developments would play a role in the outlook for growth in sub-Saharan Africa, “some of the most salient risks are domestic, stemming from policy missteps in various countries, security threats, and domestic political uncertainties ahead of elections”.
Policymakers in those countries that were more exposed to external shocks should address vulnerabilities and foster sustainable and inclusive growth, it said.
The global lender expects Nigeria, now Africa’s biggest economy following new calculation methods for its gross domestic product, to grow 7.1% this year and 7% next year.
This would be supported by the operation of major oil pipelines that have been repaired and the continued expansion of production in non-oil sectors.
Moderate food prices and prudent monetary policies are expected to facilitate further declines in inflation in much of the region, while fiscal balances are likely to improve, the IMF said. – BDLive