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The IMF lops 0.5% SA's economic growth forecast for 2014

by , 09 April 2014

Yesterday, the International Monetary Fund (IMF) released it latest World Economic Outlook report. The report focuses on analysing global and country-specific economic factors and forecasts economic growth. For South Africa, there wasn't much good news. Let's take a closer look at what the IMF revealed in its report about SA's economy…

Strikes are dampening economic growth

The IMF cut its forecasts for economic growth in South Africa for this year and next year, reports BDLive. It bases the cuts to growth on “strikes and policy uncertainty”.

The IMF cut this year’s economic growth forecast to 2.3% from the 2.8% it provided in January, says MoneyWeb. For next year, the IMF predicts economic growth at 2.7%, down from the 3.3% it previously forecast.

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And it wasn’t just economic growth that proved a concern.

The IMF raised its inflation forecast 0.5% higher

The lender also increased its inflation forecast from 5.5% to 6%, adds MoneyWeb. But on a more positive note, the IMF cut its projection for SA’s current account deficit this year. It revised that down to 5.4% from 6.1% of GDP.

The IMF said the Reserve Bank may have to hike interest rates again, notes IOL. It says this move would “protect the country against the outflow of capital and limit the effect of a weaker rand on inflation.

The IMF said if SA tightened “fiscal and monetary policies… [it would] lower the country’s vulnerabilities and contain the second-round impact of the depreciation on inflation,” adds IOL.

The lender said that “’tight’ global financing conditions or a slowdown in emerging market economies” could cause additional problems to countries like SA, says BDLive.

So not a great deal of good news for SA in the IMF’s report in terms of forecasts for this year and 2015.

The IMF lops 0.5% SA's economic growth forecast for 2014
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