IMF downgrades SA growth to below 1.5%

(iStock)
(iStock)

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

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