JOHANNESBURG - The World Bank today maintained South Africa’s economic growth this year at 0.6% despite citing that economic activity expanded at a faster-than-expected rate in the second quarter, following two successive quarters of contraction.
The World Bank said policy uncertainty continues to weigh on business and consumer confidence in the country.
“Slowing food inflation provided a boost to household demand, but high unemployment continues to hamper growth in the consumer sectors,” the bank said.
However, the bank said that current account deficit in South Africa is expected to narrow, with the surplus on the trade balance offsetting a shortfall in services, income, and the current transfer accounts.
“In South Africa, the current account deficit has been financed mainly through net portfolio investment inflows, as nonresident investors continued to acquire South African debt securities in a global search for yields,” the Bank said.
On Tuesday, the International Monetary Fund (IMF) cut South Africa’s economic growth forecast for 2017 to 0.7 percent-down from original forecast of 1 percent. The group cited “rising political uncertainty” as the main factor behind the cut, stating that it has dented consumer and business confidence across the country.