BMI Research, a unit of Fitch Group, has cut South Africa\u2019s growth forecast to just 0.7% in 2017, down from 1.0% previously.<\/p>\n
The group warned that Eskom and the South African government’s dogged pursuit of nuclear energy were two big alarm bells ringing on the economy, while the recent move into a technical recession would also add pressure.<\/p>\n
\u201cThe significantly higher costs associated with nuclear technology compared to coal-fired or renewable electricity generation mean that the financial headwinds facing Eskom, and the government\u2019s weakening ability to provide support to the company, will place a significant financial strain on the country if the nuclear power plants are pursued,\u201d it said.<\/p>\n
The World Bank earlier this month shifted the country’s growth forecast to 0.6% for 2017, down from 1.1%, citing\u00a0\u00a0cited a \u201cdeterioration of investor confidence in South Africa amid two recent sovereign rating downgrades to subinvestment grade\u201d.<\/p>\n
It also attributed the cut to uncertainty surrounding South Africa’s political sphere, where factions are expected to clash until and during the ANC’s elective conference in December.<\/p>\n
Other agencies and groups to cut South Africa’s growth forecast include FNB and Nomura – the former cutting by 0.1 percentage points to 0.6% for the year, while the latter has a very bleak outlook for the country, expecting only 0.2% GDP growth for 2017.<\/p>\n
The South African government in February put its own projections at 1.3%, however this was before president Jacob Zuma forced ratings downgrades to junk by firing former finance minister Pravin Gordhan in March, and the country entering recession in June.<\/p>\n
The International Monetary Fund is the only group to lift South Africa’s growth expectations – to 1.0% from 0.8% – based on the recovery in the country’s agricultural sector.<\/p>\n