JOHANNESBURG – The International Monetary Fund (IMF) forecast South Africa’s economy to grow 1.4 percent this year from 0.8 percent previously, as the lender painted a bleak picture of global growth.
The IMF further expected South Africa’s economy to grow by 1.7 percent next year. The Washington-based lender said the outlook for emerging markets and developing economies reflected the continued headwinds from weaker capital flows following higher US policy rates and exchange rate depreciations. “After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising,” said IMF managing director Christine Lagarde on the eve of the World Economic Forum in Davos, Switzerland.
IMF put global growth at 3.5 percent this year and 3.6 percent next year, 0.2 and 0.1 percentage points below October’s projections.
Annabel Bishop, the chief economist at Investec, said South Africa was clearly expected to remain an under performer in the region. “For South Africa, the deep decline expected by the IMF in metals prices, in particular, is a negative for growth, as metals are among SA’s key exports, and the perceived late cycle nature of global economic growth risks SA’s mining sector seeing less significant performance,” Bishop said.
“A slowdown in commodity prices would also negatively impact the rand, which is a commodity currency.”