IMF revises its growth projections for South Africa

The International Monetary Fund has revised its growth projections for South Africa in its latest World Economic Outlook released on Tuesday.

Initially, the IMF slashed South Africa’s 2018 and 2019 growth forecast to less than 1 percent but now it projects the growth to strengthen to 1.5% in 2018 and to 1.7% in 2019.

The IMF noted that the medium-term outlook is subdued as growth is expected to stabilise to 1.8 percent between 2020– 2023. These revised projections are in accordance with the World Bank and the Treasury’s estimates.

World Bank forecast that growth in South Africa would increase to 1.4 percent in 2018 and would reach 1.8 percent in 2019. The same goes for the Treasury which expects a 1.5 percent and 1.8 percent growth in 2018 and 2019 respectively.

Although, the Treasury does not express full confidence in the country’s improvement, it however expects that if the country maintains this improvement, which will come in forms of effective reforms, an additional two to three percentage points could be added to its GDP.

In the fourth quarter of 2017, South Africa’s GDP grew at a quarterly rate of 3.1 percent, making it the strongest growth rate in six quarters. This growth can be attributed to agricultural gains, a rebound in internal trade and an increase in manufacturing.

The IMF on the other hand projects a slow growth process unless structural reforms are implemented. And for these to be implemented, the fund recommends an improvement in infrastructure, the efficiency of government spending in order to attract investment, and promoting growth and job creation.

President Cyril Ramaphosa has already begun the search for investments as it eyes a $100 billion skyline to revive the country’s ailing economy.