IMF cuts South African growth forecast for 2019

The International Monetary Fund has lowered its growth forecasts for South Africa from 1.5% to 1.3% for 2019.

“Growth in South Africa is expected to marginally improve from 0.8% in 2018 to 1.2% in 2019 and 1.5% in 2020, a 0.2 percentage point downward revision for both years relative to the October projections,” the group said in its April report.

“The projected recovery reflects modestly reduced but continued policy uncertainty in the South African economy after the May 2019 elections.”

South Africa’s economy grew at o.8% in 2018 slightly beating estimates, according to Stats SA data published at the beginning of March.

Economists and analysts expected the country’s GDP figures to be around 0.6% and 0.7%.

Following a technical recession in 2018, most forecasts were revised down from the 1.2%-1.5% range, as the economic realities set in despite upbeat talk around political change in the country.

Third quarter data surprised on the upside, with the latest fourth quarter data showing the economy was bolstered by the communications and manufacturing industries.

In the fourth quarter of 2018, GDP output was up 1.4% from the third quarter, and up 1.1% from the fourth quarter of 2017.

Speaking at an event in Johannesburg on Tuesday (9 April),  S&P sovereign analyst Gardner Rusike said that investment remains South Africa’s “Achilles’ heel” and if that changes, the economy could expand more than 2% in coming years.

S&P rates South Africa’s foreign-currency debt at BB, two levels below investment grade, and its rand-denominated obligations one step higher.

Read: The best case scenario for South Africa’s elections according to S&P

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IMF cuts South African growth forecast for 2019