South Africa growth outlook cut to 0.1%
The International Monetary Fund has cut South Africa’s growth outlook for 2016 to just 0.1%.
According to the IMF, the country’s economy simply cannot keep up with the increasing population, while it also faces challenges both internally and externally.
“The outlook is sobering… This means the economy is not keeping up with the rate of population growth, which is 1.7%,” the IMF said.
Projected growth in 2017 is expected to be 1.1%, the group said.
The latest cut from the IMF comes just months after the previous adjustment, which pegged growth at 0.6% for 2016.
South Africa has been hit hard by slowing global markets, particularly out of China, the biggest consumer of South Africa’s exports, and has most recently suffered from market volatility surrounding the Brexit.
Locally, the country has faced ongoing drought conditions, rising inflation, and political unrest which has spooked investors.
According to the IMF, there is also uncertainty about the South African government’s commitment to cut spending and managed the country’s finances optimally.
The new growth projections put the country on the edge of an anticipated recession, though many analysts and economists say the country is already there.
The South African National Treasury said that it was more optimistic about the country’s growth prospects:
“National Treasury forecast is more positive compared to the IMF. In the immediate term, we expect growth and employment to be supported by several structural reforms and targeted government interventions.”
The Treasury said in February the economy would grow by 0.9% this year.
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