IMF outlook highlights SA’s economic struggles

[Nat Quinn]

 

IMF outlook highlights SA’s economic struggles

Last week’s World Economic Outlook published by the International Monetary Fund was a depressing reminder of how far we are from the kind of economic performance we should be achieving as a country. It showed the IMF is expecting South Africa to grow only 0.9% this year, rising to a still miserable 1.2% in 2025.

But what really puts that performance into context is the expectations for global growth, with the IMF forecasting 3.2% both this year and next. Sub-Saharan Africa will perform even better, delivering 3.8% this year and 4.0% next year. If you exclude South Africa and Nigeria, the two biggest economies, regional growth will be 4.5% and 5.1%.

The IMF’s forecasts reflect the many headwinds facing our economy, with the logistics crisis constraining our ability to get our output to global markets, as well as ongoing electricity shortages and wider infrastructure failures. It also is concerned about electoral uncertainties which could affect reform momentum. But it also acknowledges that reforms are having a positive impact, particularly in solving the energy challenges. The trouble is that the gap between reforms and changes to economic output can be significant – it takes time for production to respond to the opportunities that reform enables.

At BLSA we work hard to support momentum for structural reform that will open a new growth path for the economy. Many of our challenges, from logistics and energy to local service delivery, depend on infrastructure. We support the National Energy Crisis Committee and the National Logistics Crisis Committee, among other interventions, by mobilising resources and funding to ensure their success. But there is a huge and urgent need to mobilise investment, from building out the electricity grid to local water treatment plants. City-level infrastructure is also a huge challenge, to ensure delivery of basic services like water and local roads. Government’s fiscal position means it cannot open the spending taps itself, while the state-owned enterprises also have balance sheet constraints that mean they cannot raise the debt to invest either.

The only option is for the private sector to partner with the state in a way that can mobilise private investment.

Busi Mavuso is CEO  of Business Leadership South Africa.

 

source:IMF outlook highlights SA’s economic struggles – Moneyweb

[Author]

Posts