The World Bank has cut South Africa’s growth projections for 2017 in half, bringing it in line with the low expectations of economists and the South African government itself.
In a statement on Tuesday (19 September) the global banking group reduced South Africa’s growth prospects to 0.6%, from a forecast of 1.1% at the start of the year.
The growth forecast from the South African government was also greatly reduced in August, when president Jacob Zuma said that growth was likely to be around 0.5% in 2017, down from ‘rosier’ ambitions of 1.3% earlier in the year.
The World Bank warned that any prospect of recovery in would “remain fragile” unless South Africa succeeds in becoming more productive.
Since the end of the 2009 global economic recession, South Africa has consistently missed its growth targets of 5%. The government has repeatedly blamed adverse global economic conditions for this failure.
However, current global conditions are again favouring emerging markets, but investors remain bearish on South Africa in particular over its adverse political climate.
Policy uncertainty; growing political instability; high levels of unemployment; extreme inequality; and poverty all mire the country’s ability to be productive and grow, analysts have said.
Speaking to Reuters, World Bank southern Africa specialist Sebastian Deussus said that South Africa is not benefiting from the global economic rebound, despite being well-placed in exports markets.
“But we don’t see the country’s exports breaking into new markets,” he said.
Economists’ predictions for growth in 2017 now range between as little as 0.2% to 0.7%. The country’s economy grew at 0.3% in 2016.