South Africa’s economic growth slowed this year because of labor strikes, low private investment, and weak consumer spending and confidence, the Washington-based lender said in its World Economic Outlook today.
“South Africa needs decisive progress in implementing structural reforms to strengthen education and the effectiveness of government services, ease infrastructure bottlenecks, and increase product market competition and labor market flexibility,” the IMF said.
The threat of further strikes after work stoppages this year in the carmaking, building and mining industries and the risk of capital outflows are among the dangers for South Africa, according to the World Bank Africa’s Pulse report released yesterday. Speculation about when the U.S. Federal Reserve will start tapering its $85 billion-a-month monetary stimulus program has helped weaken the rand by 15 percent against the dollar in 2013, the most of 16 major currencies tracked by Bloomberg.
South Africa needs short-term capital inflows to help finance the deficit on its current account, which widened to 6.5 percent of gross domestic product in the second quarter.
The IMF kept its July forecast of 2 percent economic growth this year and 2.9 percent in 2014 unchanged. Expansion will probably not meet the government’s 2.7 percent forecast made in February, Finance Minister Pravin Gordhan said in a Bloomberg TV interview yesterday.
“In South Africa, growth is forecast to improve gradually in 2014 and beyond as global growth improves and infrastructure bottlenecks are alleviated,” the IMF said.
GDP in sub-Saharan Africa is projected to expand 5 percent this year, less than the July projection of 5.1 percent, before growth accelerates to 6 percent in 2014, the IMF said.
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