• Barclays, Bank of America expect GDP growth of less than 1%
  • Lower commodity prices curbing output in rest of Africa

The International Monetary Fund cut its economic growth forecast for South Africa by almost half to less than 1 percent as commodity prices slump and global demand remains weak.

Gross domestic product in Africa’s most industrialized nation will probably expand 0.7 percent this year, compared with October’s estimate of 1.3 percent, the Washington-based lender said in an update to its World Economic Outlook report on Tuesday. The IMF cut its projection for 2017 by 0.3 percentage points to 1.8 percent.

South Africa’s economy is struggling to cope with a plunge in metal prices, fueled by a slowdown in its biggest export market, China. Barclays Africa Group Ltd. on Monday cut its 2016 GDP growth forecast for South Africa to 0.9 percent from 1.4 percent, while Bank of America Merrill Lynch slashed its projection by a full percentage point to 0.4 percent last week.

Finance Minister Pravin Gordhan is set to announce new growth forecasts in his budget speech next month. The government had projected expansion of 1.7 percent for this year.

The IMF lowered its growth estimate for sub-Saharan Africa for this year by 0.3 percentage points to 4 percent and reduced next year’s estimate by 0.2 percentage points to 4.7 percent. That “mainly reflects the continued adjustment to lower commodity prices and higher borrowing costs, which are weighing heavily on some of the region’s largest economies,” it said.

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