IMF Raises South Africa Growth Forecast

The International Monetary Fund raised its forecast for economic growth in South Africa, saying the end of the worst drought in more than a century will lift agricultural production and rising commodity prices will boost the mining sector.

The Washington-based lender forecast growth of 1% for Africa’s most-industrialized economy in 2017, up from the 0.8% prediction it made in April,  Bloomberg reported.

Consumer inflation rate would probably fall below the 6% upper limit of the Reserve Bank’s target band in the second half of this year, it said in a statement after a so-called Article IV visit by officials from May 3 to May 16.

“Following last year’s near-stagnation, there are signs that a modest improvement in the pace of economic growth is under way,” Paolo Mauro, who led the IMF team, said in the statement. However, he warned: “The pace of recovery this year and the next is unlikely to prevent a further increase in unemployment and a continued decline in per capita incomes.”

Mining production surged 15.5% year on year in March, beating analysts’ estimates and compared with growth of 4.6% in February. Manufacturing output rebounded in March from a decline the previous month. The economy grew 0.3% last year, the slowest since a 2009 recession.

The government faced a dual challenge of stimulating growth while making the economy more inclusive, the IMF said. That would require reforms of the labor market as well as state-owned companies, it said.