SUNDAY TIMES - IMF cuts SA’s economic growth forecast by almost half,,
Sunday Times Business By Rene Vollgraaff, 2016-01-19 12:12:10.0

IMF cuts SA’s economic growth forecast by almost half

Shoppers push trolleys at an upmarket shopping mall in Sandton, Johannesburg, September 23, 2015.

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

Gross domestic product in the country will probably expand 0.7% this year, compared with October’s estimate of 1.3%, 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%.

The 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 to 0.9% from 1.4%, while Bank of America Merrill Lynch slashed its projection by a full percentage point to 0.4% 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% for this year.

The IMF lowered its growth estimate for sub-Saharan Africa for this year by 0.3 percentage points to 4% and reduced next year’s estimate by 0.2 percentage points to 4.7%.

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.

- Bloomberg