Johannesburg - Growth in sub-Saharan Africa should accelerate in 2014, although regional powerhouse South Africa remains vulnerable to weak investor and consumer confidence and the impact of labour unrest, the IMF said on Tuesday.
In its latest World Economic Outlook, the International Monetary Fund said Africa's biggest economy faced risks from a slowdown or sudden stop in capital inflows, which could be triggered by a global repricing of risk or domestic shocks, especially escalating industrial tensions.
South Africa's rand, which relies heavily on foreign flows into the bond market, has fallen nearly 18 percent against the dollar so far this year, partly due to investor fears over strikes that have hit mining output in the world's largest platinum producer.
Foreign accounts have only bought a net ($4.3 billion) worth of bonds so far this year, about half the 81 billion rand taken up over the same period last year, the latest data from the Johannesburg Stock Exchange shows.
“Policy uncertainty, and elevated household debt will (also) weigh on economic performance,” the IMF said.
President Jacob Zuma's ANC government has been at pains to assure investors it will not tilt to populism despite pressure to increase social spending ahead of elections next year.
Elsewhere in the sub-Saharan region, growth should quicken in 2014, reflecting strong domestic demand in most countries, with expansion seen at 6 percent next year from about 5 percent in both 2012 and 2013, the IMF said.
But spillovers from sluggish external demand, reversal of capital flows, and declines in commodity prices had cut growth prospects in many countries compared with April 2013 forecasts.
Fellow Bretton Woods institution World Bank sees growth of 5.3 percent for sub-Saharan Africa in 2014, underpinned by strong private and public investment.
“To achieve sustainable and inclusive growth in the medium term, governments should deepen structural reforms and give priority to infrastructure investment and social spending,” the IMF added. - Reuters