SA growth to flatline in 2016: Central bank

JOHANNESBURG: South Africa’s central bank cut its 2016 growth forecast to zero per cent, as the continent’s most advanced economy struggles with high unemployment, a severe drought and global uncertainty.

Reserve Bank governor Lesetja Kganyago said the domestic outlook remained “extremely challenging” after GDP contracted by 1.2 per cent in the first quarter of the year. “Domestic growth has surprised further on the downside, and the outlook remains constrained,” said Kganyago.

“The bank’s latest forecast is for zero per cent growth in 2016, compared with 0.6 per cent previously.”

Earlier this month, the International Monetary Fund (IMF) cut its 2016 forecast to 0.1 per cent growth — adding that the figure was far below the country’s population growth of 1.7 per cent.

The Reserve Bank said the outlook was also clouded by uncertainty around the global implications of the British vote to leave the EU.

As expected, the bank kept its key interest rate unchanged at 7.0 per cent despite concern over inflation of 6.3 per cent, which is outside the target range of between 3 and 6 per cent.

South Africa last month avoided a credit downgrade to junk status by S&P Global Ratings as the government tries to convince investors that its policies will foster future growth. — AFP