{"id":234101,"date":"2018-03-27T11:10:09","date_gmt":"2018-03-27T09:10:09","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=234101"},"modified":"2018-03-27T11:10:09","modified_gmt":"2018-03-27T09:10:09","slug":"sp-lifts-south-africas-growth-forecast-to-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/234101\/sp-lifts-south-africas-growth-forecast-to-2\/","title":{"rendered":"S&P lifts South Africa’s growth forecast to 2%"},"content":{"rendered":"

New leadership and ensuing policy announcements have boosted local and foreign investor confidence in South Africa – but structural challenges remain.<\/p>\n

This is according to S&P Global Ratings which has\u00a0raised its GDP growth forecast for South Africa to 2% for 2018, from 1% previously. It also revised its forecast for 2019 up to 2.1%, from 1.7% before.<\/p>\n

This is partly due to strengthening domestic and foreign investor sentiment following a change in the country’s leadership and ensuing policy announcements, it said in a statement on Tuesday.<\/p>\n

It highlighted that an\u00a0ongoing global upturn is also boosting demand for both commodities and manufactured goods, while improved investor sentiment has translated into a stronger rand, lower inflation, and lower bond yields, compared with previous expectations.<\/p>\n

A more favorable inflation outlook has also given the central bank room to ease monetary policy, it said.<\/p>\n

South Africa’s Monetary Policy Committee (MPC) will meet on Wednesday (March 28), and with the strong rand and inflation under control, a\u00a0possible rate cut<\/a><\/strong> is on the cards.<\/p>\n

“A revival in confidence and lower funding costs should support business investment, while a boost to real income from lower inflation bodes well for household spending.<\/p>\n

“This should more than offset any drag on growth from the announced fiscal tightening,” said S&P senior economist Tatiana Lysenko.<\/p>\n

“Our revised growth forecast for 2018 also takes into account recent statistical releases. The economy finished 2017 on a high note, with annualised quarterly growth jumping to 3.1% in the fourth quarter.<\/p>\n

“Moreover, historical revisions to national accounts show somewhat more resilience compared with data reported previously.<\/p>\n

“Taken together, this implies a stronger carry-over this year and lifts 2018 growth,” she said.<\/p>\n

But S&P also questioned\u00a0how quickly reform efforts will ease structural constraints to economic growth.<\/p>\n

Structural challenges relate to labor and product market inefficiencies, including in the large state-owned enterprise (SOE) sector, and poor education outcomes and skills shortages.<\/p>\n

GDP growth of just above 2%, or 0.5% in per capita terms, is very low for a country at South Africa’s income levels, and not sufficient to sustainably reduce its very high unemployment levels.<\/p>\n

“The government has taken some steps to improve governance of SOEs, which is an important development, but we are yet to see reform progress in other areas.<\/p>\n

“A key constraint is the rigid labor market with its inefficient wage-setting mechanisms and high barriers to entry and exit,” said Lysenko.<\/p>\n

“Further, the economy remains exposed to tightening liquidity conditions.<\/p>\n

“Nevertheless, we no longer see South Africa as among the ‘fragile five’ emerging markets that would be most vulnerable to the normalisation of monetary conditions in advanced economies,” she said.<\/p>\n

\n

Read: Rand makes strong gains against the dollar after Moody\u2019s ratings decision<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

New leadership and ensuing policy announcements have boosted local and foreign investor confidence in South Africa, but structural challenges remain.<\/p>\n","protected":false},"author":10,"featured_media":60421,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[26],"class_list":["post-234101","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/234101","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=234101"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/234101\/revisions"}],"predecessor-version":[{"id":234147,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/234101\/revisions\/234147"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/60421"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=234101"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=234101"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=234101"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}