The International Monetary Fund (IMF) said yesterday at the end of a visit to South Africa that its staff were increasingly concerned about the country’s economic growth outlook and the implications for employment, poverty and inequality.
The National Treasury responded by saying the IMF’s concerns were broadly aligned with government plans to stimulate growth.
“The government recognises the need to address deep-rooted socio-economic challenges, including unemployment, inequality and poverty, while stabilising government debt,” the Treasury said.
Africa’s most industrialised economy has recovered from the Covid-19 pandemic faster than some had predicted, with data on Tuesday showing that first-quarter output reached pre-pandemic levels.
But the recovery has been uneven across sectors, and the country is among the world’s most unequal.
The IMF pointed to a series of shocks, which it said adversely affected the economic trajectory.
“The flooding in Durban, uncertainty about the war in Ukraine, tightening of global financial conditions, and China’s slowdown pose challenges to growth and price stability,” it said.
Floods in April disrupted operations at one of Africa’s busiest ports and caused billions of rand of infrastructure damage.
“Policy action needs to focus on mitigating the impact of these shocks while addressing long-standing structural economic obstacles to growth,” the fund added.