The International Monetary Fund (IMF) has lowered sharply its 2016 GDP growth forecast for South Africa to just 0.7% from 1.3% anticipated in October, its World Economic Outlook (WEO) update released on January 19, showed.
Africa’s most developed economy is expected to gather speed, expanding by 1.8% next year, which is, however, below the October projection of 2.1%. In 2015, South Africa’s economy grew by an estimated 1.3%.
The IMF also cut its GDP growth outlook for Nigeria, the continent’s largest economy and biggest oil producer, to 4.1% from 4.3% for this year and to 4.2% from 4.5% for next year. Last year’s expansion is estimated to have more than halved to 3.0% from 6.3% in 2014, as the country was severely hurt by the global oil price drop.
The global lender’s growth expectations for sub-Saharan Africa have been revised down to 4.0% from 4.3% for 2016 and to 4.7% from 4.9% for 2017. Last year’s growth is estimated at 3.5%.
“Most countries in sub-Saharan Africa will see a gradual pickup in growth, but only to rates that remain lower than those achieved during the past decade,” the fund said in a statement on its website.
The IMF provided no country-specific outlook details in its short WEO update, in which it cut its global output forecast by 0.2pp to 3.4% for 2016 and 3.6% for 2017, but noted that “emerging market and developing economies are now confronting a new reality of lower growth, with cyclical and structural forces undermining the traditional growth paradigm”. It also underscored that risks to growth remain tilted on the downside and are particularly prominent for emerging markets and developing economies.
Earlier this month, the World Bank also worsened its growth outlook for sub-Saharan Africa citing external shocks - chiefly the drop in commodity prices, a slowdown in major trading partners, and tightening borrowing conditions - alongside domestic constraints like electricity shortages and political instability. However, it was much more optimistic for the 2016 perspectives of both South Africa and Nigeria, predicting growth rates of 1.4% and 4.6%, respectively..
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