The International Monetary Fund on Tuesday cut South Africa's economic growth forecasts for this year and next, as it urged implementation of reforms to improve policy certainty and the efficiency of State-owned companies.

Having stagnated for a decade, Africa's most industrialised economy slipped further in the second quarter by entering recession for the first time since 2009. In response, President Cyril Ramaphosa announced a plan to shift government expenditure and launch an infrastructure fund.

The IMF now expects South Africa's economy to expand 0.8%, down from a forecast of 1.5% in July. It is expected to grow 1.4% in 2019, down from a previous estimate of 1.7%, the Fund said in its latest World Economic Outlook report.

"Recent reforms in South Africa, such as measures adopted to tackle corruption, to strengthen procurement, and in the intention to eliminate wasteful expenditure, are welcome," the IMF said.

"However, further reforms are needed to increase policy certainty, improve the efficiency of state-owned enterprises, enhance flexibility in the labor market, improve basic education, and align training with business needs."