The International Monetary Fund says that South Africa’s economy is expected to grow by 0.6% in 2016, down a fraction from 0.7% it forecast in January.
The global bank highlighted weaker exports and policy uncertainty, and also cut its forecast for 2017, to 1.2%, from 1.8% in January.
“In South Africa, growth is expected to be halved to 0.6% in 2016, owing to lower export prices, elevated policy uncertainty and tighter monetary and fiscal policy,” the IMF said.
National Treasury, in February, cut its own forecasts on the country to 0.9% for 2016, and 1.7% in 2017.
Cees Bruggemans of Bruggemans & Associates, Consulting Economists said in a note on Wednesday (13 April, 2016) said that South Africa is unlikely to concentrate on its economic policy with ‘government entirely preoccupied with politics’.
Bruggemans warned that any leadership change is likely still many months if not two to three years away.
“Though Treasury is making a heroic effort to show our fiscal affairs in a positive light, what matters even more is the greater political and policy backdrop. This clearly has not inspired confidence for a long time, as reflected in a deteriorating market rating, rating agencies have been reducing our credit rating, and local companies have been taking their business elsewhere.”
“Everything points to these processes continuing for the time being, potentially further undercutting our growth, market and credit rating,” the economist said.
Instead of achieving 0.8% growth this year, or even only 0.5%, the actual number may even be negative, Bruggemans said.