World Bank forecasts continued weak economic growth for SA

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The World Bank projects that South Africa’s economic growth will remain weak due to energy and transportation challenges.

Further predictions are that the local economy will only grow by 0.5% this year, down from 1.9% last year.

The Bank anticipates economic growth in Sub-Saharan Africa to slow down this year, compared to last year.

Africa’s most industrialised economy, South Africa, is facing electricity supply challenges and logistics constraints.

It has adversely affected the manufacturing and mining sectors.

The country’s poor port and rail performance, also hindered domestic and foreign trade, limiting the ability for commodity exports to reach their destinations.

Moreover, the World Bank reports these challenges are exacerbated by pressures for higher government expenditure, particularly social spending.

Adding an increase to the wage bill amid weak growth and a decline in commodity export prices, which are causing the budget deficit to rise to 4.8% of GDP, this year.

Despite some economic recovery in Sub-Saharan Africa, the lingering uncertainty in the global economy is dragging down growth prospects in the region.

The World Bank’s Chief Economist, Andrew Dabalen explains, “Growth this year will be 2.5% compared to 3.6% last year, so that has declined if you think about the reason that is the case the large economies in Africa are underperforming, we still have lots of conflicts and finally we have the global economy that continues to hang over the continent’s recovery, 2.5% is low but it’s still positive however you basically account for population growth of 2.5 effective that means GDP per capita in Africa is zero this year.”

The Bank says low growth rates mean job opportunities are limited, making it challenging to create enough high-quality jobs to keep up with the rising number of people entering the workforce.

Dabalen says another issue hindering job prospects, is the lack of diversity in African economies, where growth is primarily driven by a limited range of sectors. – Reporting by Matimu Khosa.