World Bank lowers 2018 growth forecast for South Africa
The World Bank has lowered its 2018 gross domestic product (GDP) growth forecast for South Africa to 1%, from an April projection of 1.4%, and says the country’s growth will remain subdued in 2019.
The bank also lowered its 2019 projection for South Africa to 1.3%, from 1.8% in April, and decreased its 2020 forecast to 1.7%, from 1.9% previously.
“Growth is expected to remain subdued in 2019, as domestic demand is constrained by high unemployment and slow growth in credit extension to households, and fiscal consolidation limits government spending,” the World Bank states in the October edition of its bi-annual Africa’s Pulse publication.
Higher growth in 2020 reflected the World Bank's expectation that the government’s structural reform agenda would “gradually gather speed, helping to boost investment growth, as policy uncertainty recedes”.
The South African economy dipped into a recession in the second quarter of this year, with agriculture, mining and construction acting as major drags on economic growth.
Weak economic performances in sub-Saharan Africa’s three largest economies – Nigeria, South Africa and Angola – also negatively affected the outlook for the region as a whole.
The bank expects the average growth rate across the region to be 2.7% this year, representing only a modest recovery from the 2.3% recorded in 2017.
“The region’s economic recovery is in progress, but at a slower pace than expected,” World Bank chief economist for Africa Albert Zeufack said in a statement.
“To accelerate and sustain an inclusive growth momentum, policy makers must continue to focus on investments that foster human capital, reduce resource misallocation and boost productivity. Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt.”
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