IMF downgrades SA growth to below 1.5%

Cape Town - South Africa’s growth is projected to be below 1.5% both this year and next year, according to a report by die International Monetary Fund (IMF).

It said this projected growth reflects electricity load shedding and what it calls "other supply bottlenecks". The IMF said these infrastructure "bottlenecks" in the power sector in SA would have to be removed for faster economic growth to be possible.

The report further found that SA would have to implement reforms in education, labour and product markets in order to raise competitiveness and productivity. Government service delivery in the country is another aspect that would need to be addressed in order to enable economic growth.

"Economic growth in the major emerging market economies - Brazil, Russia, India, China and South Africa - would gradually decline by 1 percentage point relative to 2015," the report states.

"Compared with the baseline, this would amount to a sizable growth differential of 2 percentage points after five years."

READ: IMF nations warn of risks

In other emerging market economies, growth would remain broadly unchanged relative to 2015, according to the IMF.

In reaction to the IMF's projection for SA's economic growth, David Maynier, DA shadow minister of finance, said he hopes Minister of Finance Nhlanhla Nene will announce a "policy upgrade" in his upcoming mini budget on October 21.  

"We desperately need a “policy upgrade” to tackle the key binding constraints on the SA economy, including electricity shortages, the rigid labour market and a skills shortage,” said Maynier.

The IMF also cut its forecast for 2015 global economic growth. It said this is because the slowing economies in China and other emerging markets are felt worldwide.

The IMF predicted 2015 world growth of 3.1%, down 0.2 percentage points. For 2016, the IMF pared its forecast by 0.2 points to 3.6%.

ALSO READ: IMF trims forecast for global growth

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
16.53
-1.1%
Rand - Pound
19.76
+0.1%
Rand - Euro
16.97
+0.4%
Rand - Aus dollar
11.24
-0.1%
Rand - Yen
0.12
-0.9%
Gold
1,766.21
-2.4%
Silver
19.24
-3.7%
Palladium
1,936.57
+0.1%
Platinum
868.51
-2.1%
Brent Crude
113.50
+1.7%
Top 40
58,953
-3.3%
All Share
65,006
-3.1%
Resource 10
59,416
-7.1%
Industrial 25
80,333
-1.1%
Financial 15
14,357
-3.3%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot