Business

SA's economic growth forecast cut to 2%

Rene Vollgraaff

The World Bank has revised South Africa's economic growth forecast from 2.3% to 2% for 2014.

The World Bank cut South Africa's economic growth forecast for this year to 2% as an ongoing strike that's shut the nation's platinum mines disrupts output. (Gallo)

The World Bank cut South Africa’s economic growth forecast for this year to 2% as an ongoing strike that’s shut the nation’s platinum mines disrupts output.

“Tight monetary policy combined with labour strikes and deficient electricity supply will keep growth subdued in South Africa,” the Washington-based lender said in its Global Economic Prospects report released on Wednesday. In January, the World Bank projected expansion of 2.7%.

The pay strike that began on January 23 by 70 000 workers at the South African operations of the world’s three biggest platinum producers is threatening the economy with recession. Gross domestic product contracted an annualised 0.6% in the three months through March. The International Monetary Fund may lower its growth forecast for this year to about 2% or less, from 2.3%, an official said on June 9.

While the economy may avoid recession, it may be difficult to exceed last year’s growth rate of 1.9%, central bank Governor Gill Marcus said in Johannesburg on Tuesday. The bank is projecting growth of 2.1% for 2014.

The World Bank also cut its growth estimate for sub-Saharan Africa for this year to 4.7% from 5.3%, and reduced its forecast for 2015 to 5.1% from 5.4%. Excluding South Africa, the bank expects the region’s economy to expand 5.8% this year and 5.9% in 2015. – Bloomberg

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