THE International Monetary Fund (IMF) has revised down South Africa’s economic growth forecasts for 2014 and 2015, warning that strikes and policy uncertainty in the country and several others in sub-Saharan Africa are weighing on growth.
In its latest World Economic Outlook report, released on Tuesday, the IMF slashed South Africa’s 2014 economic growth outlook to 2.3% from an earlier forecast of 2.8%. The growth outlook for 2015 was revised to 2.7% from an earlier forecast of 3.3%.
"In South Africa, growth is forecast to rise moderately, driven by improvements in external demand, but risks are to the downside," the report showed.
The IMF expects the sub-Saharan African economy to grow 5.4% in 2014 and 5.5% in 2015, from 4.9% in 2013. These higher economic growth rates would reflect positive domestic supply-side developments and the strengthening global recovery, the IMF said.
"Growth in sub-Saharan Africa remains robust and is expected to accelerate in 2014," it said.
It warned, however, that "tight" global financing conditions or a slowdown in emerging-market economies could generate "external headwinds", especially for middle-income countries with substantial external links such as South Africa and producers of natural resources.
Emerging-market currencies depreciated significantly earlier this year when the US Federal Reserve began the tapering of its quantitative easing programme, which had seen it pump billions of dollars into its financial markets to stimulate economic activity.
The IMF warned that while such global developments would play a role in the outlook for growth in sub-Saharan Africa, "some of the most salient risks are domestic, stemming from policy missteps in various countries, security threats, and domestic political uncertainties ahead of elections".
It said policymakers in those countries that are more exposed to external shocks should address vulnerabilities and foster sustainable and inclusive growth.
The global lender expects Nigeria, now Africa’s biggest economy following new calculation methods for its gross domestic product (GDP), to grow 7.1% in 2014 and 7% in 2015. This would be supported by the operation of major oil pipelines that have been repaired and the continued expansion of production in non-oil sectors.
Moderate food prices and prudent monetary policies are expected to facilitate further declines in inflation in much of the region, while fiscal balances are likely to improve, the IMF said.
