South Africa’s central bank Wednesday projected that economic growth this year will be “much lower” than initial expectations.
The central bank said this in a presentation to parliament in Cape Town blaming the expected economic decline on “weak and choppy” recovery.
South Africa’s economy hasn’t grown at more than 2 percent a year since 2013 and is struggling to gain momentum despite political changes that bolstered investor confidence.
In 2017 it grew by 1.3 percent compared with a revised 0.6 percent in 2016.
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The International Monetary Fund (IMF) however raised its 2018 forecast of gross domestic product in April to 1.5 percent for 2018 and 1.7 for 2019, compared to previous forecasts of 0.9 percent and 1.6 percent respectively.
South Africa’s economic growth had also been projected by the IMF to average 1.8 percent between 2020 and 2023, well below the country’s target of 5 percent annual expansion needed to dent soaring levels of poverty and unemployment.
In another development, the South African Reserve Bank said that the one percentage point rise in South Africa’s value-added tax (VAT) in April has had a more muted impact on inflation than expected.
The bank added that fixed investment was not expected to pick up meaningfully this year, while inflation risks remained on the upside.