JOHANNESBURG – South Africa’s economy is now expected to grow by 0.6% in 2016, down slightly from the 0.7% seen in January, as weaker exports and policy uncertainty take their toll, the International Monetary Fund said on Tuesday.
In its April world economic outlook, the IMF reiterated its GDP growth projection for Africa’s powerhouse Nigeria to 2.3% this year, down 1.8 percentage points from the previous estimate in January.
Growth in Kenya was now seen at 6% in 2016 from the 6.8% predicted last December.
The IMF said output from sub-Saharan Africa would remain subdued this year before picking up in 2017 on the back of an expected small rebound in commodity prices.
Investors have been worried that South Africa, which boasts the most industrialised economy on the continent despite coming second to Nigeria in size, could veer off prudent policies under political pressure, after President Jacob Zuma suddenly fired the finance minister in December.
“In South Africa, growth is expected to be halved to 0.6% in 2016 owing to lower export prices, elevated policy uncertainty, and tighter monetary and fiscal policy,” the global lender said.
The IMF also now expects lower growth of 1.2% for South Africa in 2017, having predicted 1.8% in January.
In its February budget, the National Treasury cut its own forecasts substantially to 0.9% and 1.7% respectively for this year and 2017.
The Treasury has said it will not be distracted from implementing policies to boost growth, despite the political storm which erupted after the country’s highest court found Zuma breached the constitution by failing to repay some of the state money spent on renovating his home.
In Tuesday’s report, the IMF said growth in sub-Saharan Africa’s oil-exporting countries, including Nigeria and Angola, was now seen lower as the negative impact of lower oil prices was compounded by disruptions to private sector activity through exchange rate restrictions.
“The effect of the decline in oil prices on the region’s oil-importing countries has been smaller than expected, as many of these economies export other non-renewable resources whose prices have also dropped,” it said.
In Zambia, Africa’s second largest copper producer, the impact of drought on thermal electricity production was adding to the pressure from low copper prices. Growth would remain subdued at 3.4% this year versus 3.6%last year.