Johannesburg - South Africa’s policy uncertainty and deep structural constraints would put a lid on growth, the International Monetary Fund (IMF) said on Monday, explaining why it had put the country’s growth projection at 0.75 percent for 2017.
In its 2016 regional economic outlook for sub-Saharan Africa report, the IMF said its 2017 forecast was despite the disappearance of commodity and drought shocks. The reasons for its low prediction were not given in its earlier outlook this month.
The report said economic growth in sub-Saharan Africa in 2016 was set to slow to its lowest level in more than 20 years. Average growth was projected to be just 1.4 percent - well below population growth, and in sharp contrast to the high growth rates of recent years.
The report said gross Âdomestic product per capita would also contract for the first time in 22 years. The international lender said while the projection was for a modest recovery for 2017 to almost 3 percent, this was predicated on prompt action to address the large macroeconomic imbalances and policy uncertainty in some of the region’s largest economies (South Africa, Angola and Nigeria).
Abebe Aemro Selassie, director of IMF’s African department, said: “The slowdown reflects two broad factors. The external environment facing many of the region’s countries has deteriorated, notably with commodity prices at multi-year lows and financing conditions markedly tighter.
“In addition, the policy response in many of the countries most affected by these shocks has been delayed and inadequate, raising uncertainty, deterring private investment and stifling new sources of growth.”
The IMF said most commodity exporters were under severe economic strain, particularly oil exporting countries like Angola and Nigeria, and five of the six countries from the Central African Economic and Monetary Union, whose near-term prospects had worsened significantly in recent months despite a modest uptick in oil prices.
The report said: “Worryingly, in the face of strong financial and economic pressures, the policy response in many of the hardest-hit countries has been slow and piecemeal, often accompanied by stopgap measures, such as central bank financing and the accumulation of arrears, and leading to rapidly rising public debt.”