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Article by: Terence Creamer
Published: 28 May 2012
|SA’s sluggish growth a drag on regional average|
South Africa’s economic growth, which recovered marginally to 3.1% in 2011, is likely to slow to 2.8% in 2012, mainly as a result of domestic structural weaknesses and a fragile global economic recovery, the latest ‘African Economic Outlook’ states.
Sluggish growth in Africa’s largest economy is, therefore, likely to continue to weigh on the growth performance of sub-Saharan African economies, which grew by more than 5% last year – the figure would have been far higher if South Africa had been excluded.
In its latest Regional Economic Outlook, the International Monetary Fund moderated its 2012 forecast for sub-Saharan African to 5.4%, from 5.9% in a previous statement, owing to the weaker economic outlook for South Africa.
African Economic Outlook 2012 says the continent’s gross domestic product grew by 3.4% in 2011, from 5% in 2010, owing primarily to the fact that North Africa grew by only 0.5% as economies settled down after the political changes.
The African Development Bank, the OECD Development Centre, the United Nations Economic Commission for Africa and the United Nations Development Programme have cowritten the document, which contains notes on 53 African countries.
In its coverage of South Africa, the authors forecast a recovery in growth to 3.6% in 2013, “subject to global recovery and to an orderly resolution of the eurozone fiscal crisis”.
The document forecasts that private consumption will slow in 2012, but accelerate in 2013. Public consumption will moderate, but investment expenditure will rise.
“As domestic expenditure improves with the expected increase in fixed investment in 2013, South Africa’s import intensity is expected to rise, putting some pressure on the trade balance over the next two years. This, together with increased outflows in service, income and current transfers, is likely to widen the current account deficit in 2012 and in 2013.”
The report also notes that Africa continued to recover from the adverse effects of the global crisis in 2011 and remained amongst the fastest-growing regions of the world.
“Looking ahead, the economic outlook for Africa remains optimistic: growth is projected to rebound to 4.5% in 2012 and 4.8% in 2013,” the document states.
But external risks remain, with the continued economic crisis in the eurozone likely to reduce demand for African exports and lower external resource inflows, including remittances.
Domestically, political strife in some countries has the potential to spill over into neighbouring countries, which could constrain overall growth, while severe weather could reduce agricultural production and threaten food security, especially in the Sahel region.