Predictions For South African Economic Growth Cut

24 July 2012 19:00 - Lucy Williams

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Predictions For South African Economic Growth Cut

Growth forecasts for the South African economy have been slashed by the World Bank which initially predicted growth of 3.1 percent for Africa’s largest economy. A recent economic update showed that figures had been revised and growth for the country’s economy has now been cut downwards to 2.5 percent. The South African Treasury has forecast growth of 2.7 percent but recognise that the country’s economy needs growth of at least 7 percent to tackle their economic issues and escalating unemployment rates. Warnings have also been issued that the South African economy could be pushed into recession or stagnation due to the Eurozone’s debt crisis which continues to affect economies worldwide. If the economic problems in Europe persist and spiral into a full-blown crisis and are not resolved the South African economy could see further cuts in their economic growth.

The South African economy is one of the most exposed emerging markets and economists have seen the South African Reserve Bank doing everything they can to increase growth including unexpectedly cutting interest rates by 50 basis points. Economic recovery for the country has been difficult especially as unemployment remains at 25 percent and a loss of 1 million jobs following the 2008/9 economic crisis and subsequent recession. The World Bank, who issued the growth cut, released a report which touched on inequality affecting the growth of the economy stating that South Africa must “find a way to break this vicious, self perpetuating cycle of inequality”.

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Related Links:
• Reserve Bank of South Africa
Official Website

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