Meagre economic growth forecast

The South African economy might struggle to muster growth of more than 1% this year, the International Monetary Fund said in a report published yesterday.

The global lender expected the South African economy to grow by 0.8% in 2017, it said in its World Economic Outlook. It expects a dismal 0.3% for 2016.

The IMF outlook is slightly more pessimistic than that of the national Treasury.

In October, Finance Minister Pravin Gordhan forecast an expansion of 0.5% in 2016, improving to 1.3% in 2017.

But when delivering his medium-term budget policy statement, Gordhan cautioned that growth was expected to increase only moderately over the next three years and could be hampered by domestic risks, including new spending pressures and liquidity risks at some state-owned entities.

Nedbank economist Busisiwe Radebe said the bank expected 0.4% growth in 2016 and 1.1% in 2017.

"We are seeing a slight increase in commodity prices that might benefit [South Africa] and the end of the drought will also help."

The global economy is projected to grow by 3.1%.

Maurice Obstfeld, an IMF research department director, said: "Much of the better growth we expect this year and next stems from improvements in some large emerging-market and low-income economies that in 2016 were exceptionally stressed."

Better prospects in the US, China, Europe and Japan augur well for global growth. Growth projected for advanced economies had improved slightly to 1.9% in 2017 and 2% in 2018.

Emerging-market and developing economies are estimated to grow at 4.1% in 2016, increasing to 4.5% in 2017. This is 0.1 percentage points weaker than the IMF's October projection.

But China's growth forecast was revised upwards by 0.3 percentage points to 6.5% from October on the expectation of continued policy support.