World Bank predicts 2.7% global growth
THE WORLD Bank said yesterday in its January 2017 Global Economic Prospects report that global economic growth was forecast to accelerate moderately to 2.7percent.
Sub-Saharan African growth was expected to pick up modestly to 2.9percent this year as the region continued to adjust to lower commodity prices, according to the report.
The SA Reserve Bank and National Treasury predicted growth of just more than 1percent for South Africa this year.
President Jacob Zuma’s forecast of a 2.9 percent economic growth rate for this year at the ANC’s 105th birthday celebrations on Sunday has been rubbished by economists.
Nigeria is forecast by the World Bank to rebound from recession and grow at a 1percent pace, while Angola is projected at a 1.2percent pace.
Growth in advanced economies is expected to edge up to 1.8percent this year. Fiscal stimulus in major economies – particularly in the US – could generate faster domestic and global growth than projected, although rising trade protection could have adverse effects.
Growth in emerging market and developing economies should pick up to 4.2 percent this year from 3.4 percent in the year just ended amid modestly rising commodity prices.
Nevertheless, said the World Bank, the outlook was clouded by uncertainty about policy direction in major economies. A protracted period of uncertainty could prolong the slow growth in investment that was holding back low-, middle-, and high-income countries.
Momentum Investments said this week that growth in South Africa’s economy was set to improve this year, with agricultural output expected to recover, thanks to higher rainfall, while exports were likely to piggyback off slightly better global economic activity and a modest revival in commodity prices.
Momentum’s economists, Herman van Papendorp and Sanisha Packirisamy, said growth, however, was likely to remain sluggish as political uncertainty ahead of the ANC’s elective conference in December deterred fixed investment and purchases of bigticket consumer goods.
“Restocking in response to higher growth expectations could lift growth to above 1 percent in 2017.”
They said though lower food inflation and a probable shift to looser monetary policy in the second half should provide some relief to consumers, households remained exposed to a bleak jobs outlook, high levels of indebtedness and the potential for higher taxes.
“Based on our forecasts for headline inflation to drop more meaningfully on a twoyear outlook, we expect further interest rate cuts in 2018 to benefit consumption spend.
Momentum said although South Africa scored higher on the World Bank governance indicator, the ratings agencies warned that rising perceptions of political interference in key spheres of government institutions threatened the country’s macroeconomic performance, public finances and consequently the ratings outlook.