IMF Lowers South Africa Growth Forecast for 2019

The International Monetary Fund (IMF) have reduced South Africa’s 2019 growth forecast to 1.3%, having previously pegged it at 1.5%. This is contained in their just released April report.

“Growth in South Africa is expected to marginally improve from 0.8% in 2018 to 1.2% in 2019 and 1.5% in 2020, a 0.2 percentage point downward revision for both years relative to the October projections.”

“The projected recovery reflects modestly reduced but continued policy uncertainty in the South African economy after the May 2019 elections.” the report reads in part.

The nation’s growth beat expectations in 2018 with a 0.8% growth, according to data published by Stats SA in March. The 2018 growth projections were between 0.6% and 0.7%. Still, these were figures revised after the 2018 technical recession. The previous forecasts for the year ranged between 1.2% and 1.5%.

During the year 2018, economic realities settled amid the debate of political change. Growth started improving significantly in the third quarter.

Data from the fourth quarter indicated that manufacturing and communication industries were responsible for the growth. There was a 1.4% growth in the fourth quarter, relative to the third quarter, and a 1.1% improvement from the fourth quarter of 2017.

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S&P sovereign analyst Gardner Rusike, speaking at an event on Tuesday, said that investment is still the “Achilles’ heel” of the nation. If the investment situation were to change, the economy would grow by more than two percent in the near future.

According to S&P, the foreign-currency debt of South Africa is at the BB level, a level two steps below the investment grade. And, the country’s rand-dominated obligations are higher.

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