IMF Lowers South African 2010 Growth Estimate to 3%, Cuts 2011 Forecast

The International Monetary Fund cut its 2010 growth forecast for South Africa to 3 percent, following the release of lower-than-expected third-quarter data and a downward revision of growth in the previous three months.

Africa’s biggest economy will probably expand about 3.5 percent next year, Abebe Selassie, the IMF’s division chief for Africa, said in an interview in Cape Town today. On Sept. 21, the Washington-based lender said it expected South Africa to grow 3.2 percent this year and 3.6 percent in 2011.

The government statistics agency said on Nov. 23 that the economy expanded an annualized 2.6 percent in the third quarter, less than the 3.3 percent median estimate of 20 economists surveyed by Bloomberg. The agency also revised its growth figure for the second quarter down to 2.8 percent from 3.2 percent.

The IMF’s revised forecasts are in line with those of the National Treasury’s Oct. 27 mid-term budget. On Nov. 18, the central bank said it expects the economy to expand 2.8 percent this year and 3.3 percent next year.

The rand’s 36 percent rise against the dollar since the end of last year has eroded the competitiveness of the country’s exports and frustrated government’s efforts to boost growth, reduce income inequality and cut the 25 unemployment rate.

“There is no silver bullet to try and address the strength of the rand,” Selassie told lawmakers. “The policy options are well-known. There are very direct trade-offs.”

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net.

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