South Africa’s economy could swing back to recovery in 2017, says the International Monetary Fund, but cautions that Africa’s second largest economy would have to stave off expected further shocks from China, heightened global financial volatility and sovereign debt credit rating downgrades.
An IMF team visited Cape Town, Pretoria and Johannesburg in the past two weeks and met Finance Minister Pravin Gordhan, South African Reserve Bank Governor Lesetja Kganyago, Minister in the Presidency for Planning, Performance, Monitoring, Evaluation and Administration Jeff Radebe as well as labor federations and business leaders, Fin24 reported.
“A muted recovery is envisaged from 2017. Risks to this outlook are tilted to the downside and include further shocks from China, heightened global financial volatility, and sovereign debt credit rating downgrades,” said Laura Papi, leader of the IMF mission to South Africa on Friday.
The IMF visit to South Africa was to undertake discussions under the 2016 Article IV Consultation discussions.
The IMF also concluded that “South Africa faces a challenging economic environment” hence the Bretton Woods institution was projecting a 0.6% economic growth trajectory for this year.
This paltry growth outlook for the current year would be reflective of “falling per capita income” in the South African economy.
“South Africa needs to create an environment that facilitates high and inclusive private sector-led growth that creates more jobs. The government and the South African Reserve Bank have taken appropriate steps to counter rising government debt and inflation,” the IMF said.
However, much more in the form of structural reforms is needed to reduce policy uncertainty, boost confidence, tackle structural impediments, and lower vulnerabilities to further economic jolts.
