Fin24 reports that the International Monetary Fund (IMF) on Wednesday announced a bleak forecast for SA for 2023, with economic growth projected to reach only 0.1%.
Its forecast for the medium term is only a little better, with growth of 1.5% expected, well below the 1.7% rate of population growth. This means South Africans will continue to get poorer per capita, with poverty and inequality set to rise. The IMF also disagreed with the National Treasury's budget framework, pointing out that contrary to claims that the budget deficit would narrow, it expected the deficit to widen. The weak growth outlook, which it said was driven by power cuts, lower commodity prices, and an unfavourable global environment, is considerably more pessimistic than the National Treasury in the February budget. It is also more pessimistic than that of the SA Reserve Bank (SARB). In a statement the IMF said: “South Africa's economic and social challenges are mounting, risking stagnation amid an unprecedented energy crisis, increasingly binding infrastructure and logistics bottlenecks, a less favourable external environment, and climate shocks. A recovery in the services sector supported job creation in 2022; however, employment remains below pre-pandemic levels, and unemployment is close to record highs on the back of already high poverty and inequality.” The IMF praised SARB for successfully anchoring inflation expectations and said it expected inflation to fall within the target range of between 3% and 6% by the end of 2023. While the IMF noted that the government was progressing with structural economic reforms, particularly through Operation Vulindlela, it said more reforms were needed.
- Read the full original of the report in the above regard by Carol Paton at Fin24
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