The International Monetary Fund (IMF) on Tuesday cut South Africa’s economic growth forecasts for this year and next, citing urgent reforms to shore up its growth.
The fund, in its latest World Economic Outlook report, said the country needed to implement reforms to improve policy certainty and the efficiency of state-owned companies.
“The IMF now expects South Africa’s economy to expand 0.8 per cent, down from a forecast of 1.5 per cent in July.
“It also expects the economy to grow 1.4 per cent in 2019, down from a previous estimate of 1.7 per cent.
“Recent reforms in South Africa, such as measures adopted to tackle corruption, to strengthen procurement, and in the intention to eliminate wasteful expenditure, are welcome.
“However, further reforms are needed to increase policy certainty, improve the efficiency of state-owned enterprises, enhance flexibility in the labor market, improve basic education, and align training with business needs,” the IMF said.
Having stagnated for a decade, South Africa’s economy slipped further in the second quarter by entering recession for the first time since 2009.
In response, President Cyril Ramaphosa announced a plan to shift government expenditure and launch an infrastructure fund.