Johannesburg - The World Bank cut South Africa’s economic growth forecast for this year to 2 percent as a 20-week strike that’s shut the nation’s platinum mines disrupts output.
“Tight monetary policy combined with labour strikes and deficient electricity supply will keep growth subdued in South Africa,” the Washington-based lender said in its Global Economic Prospects report released today.
In January, the World Bank projected expansion of 2.7 percent.
The pay strike that began on January 23 by 70,000 workers at the South African operations of the world’s three biggest platinum producers is threatening the economy with recession.
Gross domestic product contracted an annualised 0.6 percent in the three months through March.
The International Monetary Fund may lower its growth forecast for this year to about 2 percent or less, from 2.3 percent, an official said on June 9.
While the economy may avoid recession, it may be difficult to exceed last year’s growth rate of 1.9 percent, central bank Governor Gill Marcus said in Johannesburg yesterday.
The bank is projecting growth of 2.1 percent for 2014.
The World Bank also cut its growth estimate for sub-Saharan Africa for this year to 4.7 percent from 5.3 percent, and reduced its forecast for 2015 to 5.1 percent from 5.4 percent.
Excluding South Africa, the bank expects the region’s economy to expand 5.8 percent this year and 5.9 percent in 2015. - Bloomberg News