Development financier the Industrial Development Corporation (IDC) has revised downwards its 2012 growth forecast for SA to 2.5% from 2.8% previously amid a slowing domestic and global economy.
Growth is expected to improve in 2013 to 3.3%‚ down from an earlier projection of 3.5%‚ the IDC said in a research note released on Friday.
This is yet another downward revision of the country’s growth forecast‚ with many institutions now expecting growth of around 2.6% for this year from 3.1% last year.
The IDC expected the rate of increase in household expenditure to moderate as a yet high household debt burden‚ job insecurity‚ and decelerating growth in real disposable incomes weigh on consumers’ ability and willingness to maintain the spending pace.
The household sector accounts for a significant amount of domestic economic growth.
The development finance institution said the escalating crisis in the eurozone and its spill-over effects had already impacted on the performance of SA’s economy.
Lower export sales to European markets‚ down 6.2%‚ or close to R5.4bn‚ and more subdued demand in Asia and the Americas contributed to a substantial deterioration in the trade deficit to a cumulative R51.1bn during the first six months of this year.
The IDC assumed that if exports to the eurozone declined by 5% relative to their 2011 values‚ overall value add (GDP) could potentially contract by R5.9bn on an annual basis‚ translating into a reduction in GDP growth of 0.2 of a percentage point.
“Moreover‚ in terms of employment opportunities‚ lower export volumes could result in around 18‚700 jobs being lost across various sectors of the domestic economy‚” the IDC said.
Their assumption did‚ however‚ not include the potential indirect effects emanating from weaker demand in other key export markets‚ which the IDC said would further aggravate the negative macroeconomic impact.