The International Monetary Fund (IMF) has attributed its decision to lower its growth forecasts for the South African economy in 2020 and 2021 to Eskom’s nationwide power cuts, structural constraints and deteriorating public finances.
The IMF now sees the economy growing at 0,8 % this year, down from a previous forecast of 1,1 % growth and 1,0 % in 2021, down from an earlier prediction of 1,4% growth.
President Cyril Ramaphosa has been struggling to push through the much-needed reforms and rein in rapidly rising debt levels. In recent months, Eskom’s implementation of load shedding has negatively affected economic output and lowered investor confidence.
“These growth rates are lower than the population growth rates in South Africa, in terms of per capita. In terms of South Africa, there’s still elevated policy uncertainty tied to structural reforms and that has been weighing on growth. Public spending is now worse than it would have been and these factors are having an impact,” says Gian Maria Milesi-Ferretti, Deputy Director in the Research Department of the IMF.