The International Monetary Fund downgraded its economic-growth forecasts for South Africa, warning that logistical challenges are constraining activity and acting as a drag on the entire region.<\/p>\n\n\n\n
Africa\u2019s most-industrialized economy will likely grow a meagre 1% this year, <\/strong>significantly slower than the IMF\u2019s forecast in October, when it saw South Africa\u2019s gross domestic product expanding by 1.8%<\/strong>, the Washington-based lender said Tuesday in an update to its World Economic Outlook.\u00a0<\/p>\n\n\n\n That\u2019s due chiefly to \u201call of the disruptions we\u2019ve seen in the energy sector and also the logistics \u2014 in transportation, freight and ports in South Africa,\u201d IMF Chief Economist Pierre-Olivier Gourinchas said. \u201cThat needs to be addressed.\u201d<\/p>\n\n\n\n The country has been handicapped by rolling power cuts and snarled logistics at its ports and railways that reflect years of inadequate investment and poor management. The fund cut the country\u2019s 2025 forecast to 1.3% from 1.6%. <\/p>\n\n\n\n Gourinchas was also cautious about South Africa\u2019s frail fiscal position and elevated public debt levels. Finance Minister Enoch Godongwana will deliver his annual budget speech on Feb. 21.<\/p>\n\n\n\n \u201cWe were talking about the need for fiscal consolidation for South Africa,\u201d he said. \u201cThere is a need also to put public spending under control and to raise tax revenues.\u201d<\/p>\n\n\n\n South Africa will hold elections this year, posing additional challenges to the public purse. <\/p>\n\n\n\n With polls showing the ruling African National Congress at risk of losing its majority for the first time since 1994, some elements of the party will likely oppose spending cuts, even as the Treasury argues for fiscal restraint.<\/p>\n\n\n\n The country\u2019s tepid performance is also holding back the entire region. While the IMF sees Sub-Saharan Africa growing by 3.8% this year, it\u2019s notched that outlook back sightly.<\/p>\n\n\n\n \u201cThe downward revision for 2024 of 0.2 percentage point from October 2023 mainly reflects a weaker projection for South Africa <\/em>on account of increasing logistical constraints,\u201d the lender said.<\/p>\n\n\n\n
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