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IMF warns that SA’s growth will remain in the doldrums

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NewsHubThe global lender expected SA to grow by 0.8% in 2017 following the dismal 0.3% it has forecast for 2016‚ it said in the World Economic Outlook.
The outlook is slightly more pessimistic than the National Treasury’s expectations for domestic growth.
In October last year‚ Finance Minister Pravin Gordhan forecast an expansion of 0.5% in 2016‚ improving to 1.3% in 2017.
But when delivering the medium-term budget policy statement Gordhan also cautioned that growth was expected to increase only moderately over the next three years and could be hampered by domestic risks‚ including new spending pressures and liquidity risks at some state-owned entities.
Nedbank economist Busisiwe Radebe said the bank expected 0.4% growth in 2016 and 1.1% in 2017 — slightly higher than the IMF’s projection.
“We are seeing a slight increase in commodity prices that might benefit [SA] and the end of the drought will also help. But these figures are not great. ”
Meanwhile‚ the global economy is projected to grow at 3.1%‚ in line with the IMF’s October 2016 forecast.
Maurice Obstfeld‚ an economic counsellor and IMF research department director‚ said: “Much of the better growth performance we expect this year and next stems from improvements in some large emerging-market and low-income economies that in 2016 were exceptionally stressed. ”
Obstfeld also said more of the lift would be due to better prospects in the US‚ China‚ Europe and Japan. Growth projected for advanced economies had improved slightly to 1.9% in 2017 and 2% in 2018.
Emerging-market and developing economies are estimated to grow at 4.1% in 2016‚ increasing to 4.5% in 2017. This was 0.1 percentage points weaker than the IMF’s October projection. But China’s growth forecast was revised upwards by 0.3 percentage points to 6.5% from October on the expectation of continued policy support.
However‚ “the continued reliance on policy stimulus measures‚ with rapid expansion of credit and slow progress in addressing corporate debt‚ especially in hardening the budget constraints of state-owned enterprises” raised the risk of a sharper slowdown or disruptive adjustment‚ the IMF said.
– TMG Digital/BusinessLIVE

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