The South African economy is improving but its recovery remains below that of other emerging markets. A new World Bank report shows that although the commodity outlook has improved in general, the bank has revised the country’s GDP upwards.
It expects GDP to grow slowly at 1.4% in 2018 and to 1.8 % in 2019, reaching almost 2% in 2020.
The South African Reserve Bank leading business cycle indicators rose in the last quarter of 2017, supporting the case for further improvement.
The bank says higher potential growth will require ambitious structural reforms.
The World Bank says the economy is growing but has questioned how fast.
The report shows that although some green shoots are starting to show, it questions the sustainability of this improved growth.
The bank argues that consumption will likely continue as the main driver of growth and tailwinds from the agricultural recovery are expected to taper off into 2018.
However, the report warns that the country’s growth potential is limited as unemployment and inequality remains high.
South Africa is projected to remain largely below the average growth rate of 4.5% this year -lagging behind its peers.