File photo: Simphiwe Mbokazi.

The International Monetary Fund (IMF) has lowered its forecast for South Africa’s growth in 2015 to 2.1 percent due to the fall in commodity prices.

The latest forecast is down by 0.2 percent on the IMF’s October 2014 forecast.

The IMF also reduced its forecast for local growth for next year to 2.5 percent, down by 0.3 percent.

Azar Jammine, the chief economist at Econometrix, said yesterday everyone had been concentrating on South Africa’s growth forecast for this year and not next year.

“I am not sure if the figures have taken into account the fall in oil prices. However, they show that the forecast has taken into account South Africa’s structural constraints, which are expected to go into 2016,” Jammine said.

In a note, RMB Global Markets Research said: “We remain quite bearish on the outlook for South Africa. While the oil price will provide a much-needed reprieve in the short term, export prices remain depressed.”

It said the rebalancing that had been expected since 2013 had been modest, leaving the economy vulnerable to capital flow volatility.

NEGATIVE FACTORS

“Structural constraints on electricity supply, transport infrastructure and labour productivity will continue to plague the economy for the foreseeable future,” it said.

The IMF said oil prices in US dollars had declined by about 55 percent since September. The decline is partly due to unexpected demand weakness in some major economies, in particular emerging market economies, and also reflected in industrial metal prices.

“Lower oil and commodity prices also explain the weaker growth forecast for sub-Saharan Africa, including a more subdued outlook for Nigeria and South Africa.”

The IMF’s forecast growth for China, South Africa’s biggest trading partner, where investment growth has slowed and is expected to moderate further, has been marked down to below 7 percent.

However, in emerging markets and developing economies in general, growth is projected to remain stable at 4.3 percent and to increase to 4.7 percent – a weaker pace than forecast in the October World Economic Outlook (WEO). Although global growth would receive a boost from lower oil prices, this was likely to be more than offset by negative factors elsewhere, the IMF said.

It added that negative factors included investment weakness as adjustments to diminished expectations about medium-term growth continued in many advanced and emerging market economies.

In its WEO update, the IMF forecast global growth at 3.5 percent for this year, revised down by 0.3 percent, and 3.7 percent next year, revised down by 0.3 percent.

For many emerging and developing economies like South Africa, the projected rebound in growth for commodity exporters is weaker or delayed compared with the IMF’s projections in October, as the impact of lower oil and other commodity prices on the terms of trade and real incomes is taking a heavier toll on medium-term growth.

The global lender added the distribution of risks to global growth was more balanced than in October.

The main upside risk is a greater boost from lower oil prices, although there is uncertainty about the persistence of the oil supply shock.