Johannesburg - The International Monetary Fund (IMF) cut South Africa’s growth forecast for next year to 0.8 percent against a previous estimate of 1.1 percent in its World Economic Outlook (WEO) report yesterday, saying the country’s economy “will barely expand”.
The IMF’s projection for gross domestic product for the country this year remains at 0.1 percent.
In its previous forecast for this year, it said the economy was not keeping up with the increasing population.
The Reserve Bank forecasts zero percent growth this year compared with 0.6 percent previously.
Growth rates of 1.1 percent and 1.5 percent are now forecast by the central bank for the next two years, down from 1.3 percent and 1.7 percent previously.
The IMF said the largest economies in sub-Saharan Africa (Nigeria, South Africa and Angola) were experiencing sharp slowdowns or recessions as lower commodity processes interacted with difficult domestic political and economic conditions.
“Nigeria’s economy is forecast to shrink 1.7 percent in 2016, and South Africa’s will barely expand.”
In its WEO October update released yesterday, the IMF maintained its forecast for weak global growth and warned further stagnation would fuel more populist sentiment against trade and immigration that would stifle activity, productivity and innovation.
It said global growth was projected to slow to 3.1 percent this year, unchanged from its July projection, before recovering to 3.4 percent next year.
The IMF said next year's growth would be on the back of recoveries in major emerging market nations, including Russia and Brazil.
The lender said the forecast, revised down by 0.1 percentage point for this year and next year relative to April, reflected a more subdued outlook for advanced economies following the June UK vote in favour of leaving the EU, and weaker-than-expected growth in the US.
It said financial market sentiment towards emerging market economies had improved with expectations of lower interest rates in advanced economies, reduced concern about China’s near-term prospects, following policy support to growth, as well as some firming of commodity prices.