IMF likely to cut South Africa's economic growth forecast

The International Monetary Fund will likely revise its predictions for the country's economic growth downwards,

The International Monetary Fund will likely revise its predictions for the country's economic growth downwards, "in line with other observers". (AFP)

A senior IMF official has hinted that the international lender is likely to cut South Africa’s economic growth forecast when it releases a global outlook later this month, media reported on Thursday.

Axel Schimmelpfennig, the IMF senior representative in South Africa, told Business Day that he expects the organisation to “revise down South Africa’s growth outlook for 2014, in line with other observers.”

The International Monetary Fund has already cut South Africa’s economic forecast for this year to 2.3% in April from 2.8% in January and 2.9% last October.

The warning came after ratings agencies Standard and Poor’s and Fitch last month downgraded South Africa’s credit rating, citing poor growth. Standard & Poor’s lowered South Africa’s sovereign credit rating to “BBB-” just a notch from junk bond status. 

Moody’s has put the country’s rating on negative watch, raising concern about impact of strikes on the economy. 

The country has just come out of a five month long strike by platinum mineworkers who were demanding higher wages. Workers in the metals sector have also begun an open-ended strike over pay, further pilling pressure on the economy. The country is also battling to reduce persistent inequality and unemployment. 

“South Africa needs high and inclusive private sector-led growth to foster job creation and reduce income inequality,” Schimmelpfennig said. – Sapa

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