The International Monetary Fund (IMF) expects South Africa’s gross domestic product (GDP) growth to remain flat at 0.1% this year, noting that the economy will only experience a modest recovery in 2017.
Policy uncertainty was making the adjustment to weaker terms of trade more difficult, it noted, highlighting that this would be offset by commodity and drought shocks dissipating and power supply improving.
In its latest World Economic Outlook (WEO), published on Tuesday, the IMF outlined that the country could expect GDP growth of 0.8% in 2017.
This is lower than the growth of 1% forecast in the IMF’s July WEO.
It warned that unless a comprehensive structural reform package, which fosters greater product market competition, more inclusive labour market policies and industrial relations, and improved education and training, as well as reducing infrastructure gaps, was tackled, the country would not experience growth.
“Measures to improve State-owned enterprises’ efficiency and governance, including through greater private participation, are a particularly important element of the needed reform package to lift growth prospects and reduce contingent fiscal risks,” it pointed out.
While some of these reforms may take time to yield positive growth effects, immediate benefits could stem from improved confidence and the signalling of policy consistency, it added.