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Reuters (File photo) / A security official stands in the lobby of the International Monetary Fund headquarters in Washington, the US
The International Monetary Fund raised its forecast for economic growth in SA, saying the end of the worst drought in more than a century will lift agricultural production and rising commodity prices will boost the mining sector.
The Washington-based lender forecast growth of 1% for Africa’s most-industrialised economy in 2017, up from the 0.8% prediction it made in April.
The consumer inflation rate would probably fall below the 6% upper limit of the Reserve Bank’s target band in the second half of this year, it said in a statement after a so-called Article IV visit by officials from May 3 to May 16.
“Following last year’s near-stagnation, there are signs that a modest improvement in the pace of economic growth is under way,” Paolo Mauro, who led the IMF team, said in the statement.
However, he warned: “The pace of recovery this year and the next is unlikely to prevent a further increase in unemployment and a continued decline in per capita incomes.”
Mining production surged 15.5% year on year in March, beating analysts’ estimates and compared with growth of 4.6% in February.
Manufacturing output rebounded in March from a decline the previous month.
The economy grew 0.3% last year, the slowest since a 2009 recession.
The government faced a dual challenge of stimulating growth while making the economy more inclusive, the IMF said.
That would require reforms of the labour market as well as state-owned companies, it said.
The lender welcomed the government’s affirmation of fiscal goals following the appointment in March of Malusi Gigaba as finance minister, replacing Pravin Gordhan.Source: Bloomberg