World Bank slashes SA GDP growth prospects

The World Bank cut its forecast for SA’s GDP growth for 2017 by 0.5 percentage points to 0.6% in its June Global Economic Prospects report released on Sunday.

Its forecast for SA’s economic growth in 2018 was cut to 1.1% from its projection of 1.8% made in January.

The World Bank reduced its forecast for many commodity exporters‚ including SA‚ in its midyear report compared with its January report.

The new report said the expected recovery in commodity exporters was weaker than envisioned in January‚ mainly reflecting longer than expected adjustment to low commodity prices in some countries and‚ to a lesser degree‚ weaker energy price prospects.

"Recent activity in some metal exporters has been held back by special factors‚ including production bottlenecks in Papua New Guinea‚ policy uncertainty in Armenia and SA‚ and mining sector disruptions and natural disasters in Chile and Peru."

Reasons for lowering SA’s expected economic growth also included political uncertainty and low business confidence weighing on investment.

"Growth in SA is projected to recover from 0.6% in 2017 to 1.5% in 2018-19. A rebound in net exports is expected to only partially offset weaker than previously forecast growth of private consumption and investment‚ as borrowing costs rise following the sovereign rating downgrade to subinvestment level‚" the report said.

The World Bank remained bullish on the economic prospects of developed economies‚ holding its forecast for global economic growth in 2017 at 2.7%.

"A bright spot in the outlook is a recovery in trade growth to 4% after a post-financial crisis low of 2.5% in 2016‚" the report said.