international monetary fund has cut its economic growth forecast for South Africa, warning that logistical challenges are constraining activity and holding back the entire region.
Economic growth is likely to be just 1% this year, much slower than the IMF forecast in October, when South Africa's gross domestic product (GDP) expanded by 1.8%, the Washington-based financial institution said. said in the latest edition of the World Economic Outlook on Tuesday.
Pierre-Olivier Grinchat, the IMF's chief economist, said in an interview that this was largely due to “all the disruptions we've seen in the energy sector and in South Africa's logistics areas such as transport, cargo and ports.” Ta. “That needs to be addressed.”
The country has been handicapped by rolling blackouts and disrupted logistics at ports and railways, reflecting years of poor investment and poor management. The fund lowered its 2025 forecast for the country to 1.3% from 1.6%.
Grinchas was also cautious about South Africa's fragile fiscal situation and rising public debt levels. Finance Minister Enoch Godongwana will deliver his annual budget speech on 21 February.
“We were talking about the need to rebuild South Africa's finances,” he said. “We also need to rein in public spending and increase tax revenue.”
South Africa is due to hold elections this year, posing further challenges to public finances.
at risk
Opinion polls show the ANC is at risk of losing its majority for the first time since 1994, and some within the party are likely to oppose spending cuts even as the Treasury insists on fiscal restraint.
The country's lukewarm performance is also holding back the entire region. The IMF has forecast sub-Saharan Africa's growth rate of 3.8% this year, but it says that outlook has fallen sharply.
Read: Energy, logistics crisis hits South Africa's economy
“The downward revision of 0.2 percentage points to 2024 from October 2023 primarily reflects a weaker outlook for South Africa due to increased logistical constraints,” the financial institution said. — Ntando Takwana, (c) 2024 Bloomberg LP
