I’m assured South Africa’s bookish president Cyril Ramaphosa reads everything important. So trust he has already worked his way through the relevant sections of the IMF’s annual World Growth Report released yesterday. And draws courage from it to soon get cracking with much needed restructuring of a flagging economy.
The IMF’s economists dropped their forecast for SA’s economic growth a further 0.2% to an even more anaemic 1.2% for this year and just 1.5% in 2020. That’s awful, but given recent developments, almost understandable. The scale of damage wrought by Zumanomics means a rapid rebound was never in prospect.
Far more disturbing, though, is the IMF’s forecast that over the medium term SA’s economic growth rate will “stabilise” at just 1.75%, the upside capped by structural bottlenecks which “continue to weigh on investment and productivity.” As SA’s population expands at 1.2% a year, such economic growth will hardly dent an already unacceptable unemployment rate.
In Johannesburg yesterday, ratings agency S&P said it expects SA’s government to continue with policy reforms after May 8. But it also left the country’s credit rating unchanged at two levels below investment grade. Ramaphosa said he was disappointed, but confidently predicted S&P “will soon have reason” to raise the rating up. Dare we hope for something bold after May 8?
