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.<\/p>\n
Growth is expected to improve in 2013 to 3.3%\u201a down from an earlier projection of 3.5%\u201a the IDC said in a research note released on Friday.<\/p>\n
This is yet another downward revision of the country\u2019s growth forecast\u201a with many institutions now expecting growth of around 2.6% for this year from 3.1% last year.<\/p>\n
The IDC expected the rate of increase in household expenditure to moderate as a yet high household debt burden\u201a job insecurity\u201a and decelerating growth in real disposable incomes weigh on consumers\u2019 ability and willingness to maintain the spending pace.<\/p>\n
The household sector accounts for a significant amount of domestic economic growth.<\/p>\n
The development finance institution said the escalating crisis in the eurozone and its spill-over effects had already impacted on the performance of SA\u2019s economy.<\/p>\n
Lower export sales to European markets\u201a down 6.2%\u201a or close to R5.4bn\u201a 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.<\/p>\n
The IDC assumed that if exports to the eurozone declined by 5% relative to their 2011 values\u201a overall value add (GDP) could potentially contract by R5.9bn on an annual basis\u201a translating into a reduction in GDP growth of 0.2 of a percentage point.<\/p>\n
\u201cMoreover\u201a in terms of employment opportunities\u201a lower export volumes could result in around 18\u201a700 jobs being lost across various sectors of the domestic economy\u201a\u201d the IDC said.<\/p>\n
Their assumption did\u201a however\u201a not include the potential indirect effects emanating from weaker demand in other key export markets\u201a which the IDC said would further aggravate the negative macroeconomic impact.<\/p>\n
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