The International Monetary Fund lowered its forecast for South Africa’s economic growth to 1.2% in 2019 and to 1.5% in 2020, saying political and policy uncertainty remained a constraint on activity.
South Africa has seen growth stagnate in the decade since the world’s financial crisis, with policy missteps under former President Jacob Zuma making worse global conditions marked by a plunge in commodity prices and a rise in the cost of capital.
The economy grew 0.8% in 2018, and the 1.2% expansion projected by the IMF is down from its October forecast of 1.4%. In February, the National Treasury said gross domestic product would grow 1.5% in 2019.
“The projected recovery reflects modestly reduced but continued policy uncertainty in the South African economy after the May 2019 elections,” the IMF said in its World Economic Outlook before its spring meetings in Washington this month.
“Structural bottlenecks” would continue to weigh on investment and productivity, while subdued metal export prices were also a risk, the IMF said ,referring to the country’s longstanding lack of skilled labour and competition in key industries.
President Cyril Ramaphosa has pledged to re-ignite growth by attracting R1.2 trillion ($86 billion) of investments in the next five years and improving the ease of doing business in the country.
He faces an uphill battle with nationwide electricity blackouts last month expected to dim business and consumer confidence before national elections on May 8.