The World Bank has for the second time this month warned South Africa of the risk of going into recession as slump in commodity prices, weakening demand from China, power shortages, regulatory uncertainty and the worst drought in more than a century put Africa’s most advanced economy under pressure.
The global lender in a report released earlier in the month cut the nation’s growth forecast for this year to 0.8 percent and predicted that poverty would rise as incomes fall. It, however, said on Wednesday that growth should recover slightly in 2017 as export is boosted due to weaker rand. The rand has plunged 14 percent against the dollar in the past three months and lost 25 percent against the green back last year.
“Our baseline is not a recession, but obviously there is a risk of one when this year you are growing so low,” said Catriona Purfield, World Bank programme leader for South Africa, as she spoke with reporters after briefing the parliament today.
Purfield said drought alone has sent an estimated 50,000 below the national poverty line of 501 rand ($31.90) a month.
The World Bank expects South Africa to recover in 2017, with growth increasing to 1.1 percent.