Bank halves growth forecast
Figure down to 0.4%, but prospects slightly better for next year The World Bank has dropped its forecast for South Africa’s economic growth this year from 0.8% in April to 0.4%, in line with a recent Reserve Bank projection. The World Bank yesterday released its Africa’s Pulse report, which looks at prospects and developments in sub-Saharan Africa. In other key information issued yesterday, Statistics South Africa said producer inflation had slowed last month, with its index, the PPI, rising7.2% year on year, after a 7.4% increase reported last month for July. The announcement on growth prospects was made by World Bank chief economist for Africa Albert Zeufack, who said prospects for this year were marginal, but the economy should pick up moderately next year. “Private consumption is expected to remain weak owing to unemployment, house hold indebtedness and elevated inflation,”Zeufack said. “Investment growth is expected to remain sluggish because of policy uncertainty and long-standing structural issues, including unstable power supplies.” Nevertheless, the World Bank expected the situation to improve slightly to 1.1%next year and to 1.8% in 2018. It also cut its forecast for sub-Saharan Africa economic growth, and expects growth to decelerate sharply from 3%last year to 1.6% this year –the slowest growth in more than two decades. “What is even more alarming is that with this growth rate we are now hitting a point where growth per capita is negative in Africa, meaning our economies are not growing[fast] enough to cover the growth in our population. Per head we are sliding back,”Zeufack said. While economic power houses like South Africa and Nigeria were among countries dragging the region’s economic growth lower, there were signs of resilience in a number of other countries, he said. These included Tanzania, Ethiopia and Rwanda. “The quality of policies matters,”Zeufack said. “These top performers do have a better regulatory environment, and better macro economic and fiscal policies. “It is extremely important to highlight the need to accelerate reforms in our countries to weather these storms.” Sub-Saharan economic growth is forecast to rebound to about 2.9% next year. Meanwhile, in its report on PPI figures, Stats South Africa said inflation slowed last month, the producer price index(PPI) rising 7.2% year on year, after the 7.4% increase reported last month for July. Analysts say a stronger rand has helped in keeping inflation contained as a weak rand stokes inflation by raising the cost of imported goods, but renewed volatility in the currency is a risk. The economists said food inflation had been rising due to the currency’s weakness earlier in the year and because of the severe drought. But improvements should filter through.