World Bank cuts South Africa’s GDP growth for 2019

The World Bank projects that South Africa’s economy will grow to 1.3% in 2019, down from its June 2018 estimate of 1.8%.

It said that growth in 2019 is likely to remain subdued because of challenges in mining production, low business confidence and policy uncertainty.

“High unemployment and slow growth in household credit extension are expected to constrain domestic demand in 2019, while fiscal consolidation limits government spending,” it said.

“Higher growth in 2020 reflects the expectation that the government’s structural reform agenda will gradually gather speed, helping to boost investment growth, as policy uncertainty recedes and investor sentiment improves.”

It expects the country’s economy will grow at 1.7% in 2020, and 1.8% in 2021.

On GDP growth, ratings firm S&P Global expects GDP growth to average 1.8% in 2019, which is a fraction higher than the 2018 Medium Term Budget Policy Statement forecast of 1.7% in 2019 and 2.1% in 2020.

Goldman Sachs, meanwhile, expects the local economy to grow almost 3% in 2019, helped by Ramaphosa’s reforms and strong global growth, the bank’s sub-Saharan Africa head told Reuters last month.

In its “2019 Global Economic Prospects” report the World Bank cut its forecast for the global economy as slowing growth in trade and investment and rising interest rates sapped momentum, especially in emerging markets, Bloomberg reported.

Downside risks to the world economy have become more acute, including the threat of “disorderly” market movements and an escalation of trade disputes, the development lender said Tuesday in its semi-annual update to its global outlook. Debt vulnerabilities in emerging markets and developing countries have increased, it said.

The Washington-based bank expects global growth of 2.9% this year, down from 3% in 2018 and a reduction of 0.1 percentage point from its forecast in June. The bank lowered its projection for growth in emerging markets by 0.5 point to 4.2%, and slightly downgraded its outlook for expansion in the euro area.

“The outlook for the global economy has darkened. Global financing conditions have tightened, industrial production has moderated, trade tensions have intensified, and some large emerging market and developing economies have experienced significant financial market stress,” the bank said.

“Faced with these headwinds, the recovery in emerging market and developing economies has lost momentum.”

Read: South Africa’s economic forecast for 2019 – and what’s driving the rand right now

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World Bank cuts South Africa’s GDP growth for 2019