A new economic report by Focus Economics shows how global banks rate South Africa’s prospects for economic growth in 2016.
According to Focus Economics, South Africa’s economic outlook remains fragile, as electricity and water supply constraints, coupled with low commodity prices, continue to weigh on growth.
“Moreover, failure of the government to push forward with fiscal consolidation reforms might provoke a downgrade of the country’s credit rating to junk territory,” it said.
Inflation eased from 7.0% in February to 6.3% in March. Looking forward, the group said inflation is expected to remain at relatively-high levels amid a weak currency and a food supply shortage.
“Our panel projects inflation to average 6.5% in 2016 and 6.3% in 2017,” it said.
The Focus Economics panel cut its GDP forecast for the ninth consecutive month and now expects the economy to expand 0.7% in 2016, which is down 0.1 percentage points from April’s estimate.
The growth forecast is reached by finding consensus among 27 global banks and financial analysis groups. The banks’ consensus is that South Africa’s economy will grow at 0.7% in 2016, moving up to 1.4% in 2017.
The bank which rated South Africa the lowest was Deutsche Bank, which projected South Africa’s economic growth at a mere 0.1% in 2016. This was o.2 percentage points lower than Citigroup, which pegged the country’s growth at 0.3% – the second lowest.
On the other end of the scale, however, some banks were more optimistic – with Goldman Sachs keeping its growth rate for South Africa at 1.5%, and at least three others at 1%.
Economic growth predictions
|Financial Group||2016 growth||2017 growth|
|Bank of America Merril Lynch||0.4%||1.0%|
source: Business Tech