IMF downgrades SA's 2018 growth forecast to 0.8%

The International Monetary Fund has downgraded SA’s GDP expansion forecast for 2018, joining the World Bank and the SA Reserve Bank in lowering growth projections. 

In the fund’s latest Global Economic Outlook, it estimated that the South African economy would grow by 0.8% this year, down from its initial projection of 1.5% in April.  

Following the announcement in September that SA had fallen into a recession, a number of organisations have reduced the country’s growth projections. 

The World Bank last week cut SA's GDP growth estimate for 2018 to 1% this year from 1.4%, while the SA Reserve Bank slashed its forecast to 0.7% from 1.2% in September. 

The IMF expects SA’s economy to expand by 1.4% in 2019, down from its April projection of 1.7%. 

The fund noted that recent reforms in South Africa, announced by President Cyril Ramaphosa, such as measures adopted to tackle corruption, to strengthen procurement and eliminate wasteful expenditure were welcome. 

“However, further reforms are needed to increase policy certainty, improve the efficiency of state-owned enterprises, enhance flexibility in the labour market, improve basic education, and align training with business needs,” it stated. 

It added that uncertainty in the run-up to the 2019 general election was also negatively impacting growth. 

Among major middle-income countries in sub-Saharan Africa, SA has the lowest projected growth rate for 2018, according to the IMF, after Cameroon and Zambia, both projected to grow at 3.8% in 2018. 

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