Harare – Despite recent political turmoil and looming instability over moves against Finance Minister Pravin Gordhan, South Africa’s economy is southern Africa’s silver lining.
This is according to FocusEconomics, which said in its Consensus Forecast Sub Saharan Africa report for November that the region is facing an economic slowdown emanating from subdued commodity prices, a severe drought that has hampered production in the key agricultural sector and currency weakness.
Analysts at FocusEconomics said on Tuesday that the region decelerated sharply in the second quarter of the current year. This is in sharp contrast to the 1.2% expansion for southern Africa’s economy in the same quarter of the previous year.
The analysts said they see investment flows into South Africa falling 2.0% in 2016. This represents a 1.2 percentage point downgrade from the previous month’s estimate.
SA rally provided bright spot
However, for 2017 the panel expects investment flows to increase by 1.5%, up 0.2 percentage points from last month’s estimate. Despite the bleak investment inflow projections, South Africa’s second quarterly performance provided a bright spot for the region.
“The region’s silver lining in the second quarter was South Africa, which rebounded and grew at the fastest rate in over a year due to a surge in manufacturing production,” FocusEconomics said.
Dirina Mançellari, senior economist for FocusEconomics, said “growth in the region continues to be constrained by subdued commodity prices, weakness in global financial markets, security threats and a slowdown in SSA’s (sub-Saharan Africa's) main trading” partners such as China.