South Africa’s economic growth is expected to moderate to 0.9 percent in 2016, comparing with the previous forecast of 1.5 percent for the year, the country’s central bank said on Thursday.
The domestic economic growth is projected to accelerate to 1.6 percent in 2017, down from the previous forecast of 2.1 percent for the year, the South African Reserve Bank (SARB) said.
Growth in 2015 is estimated to have averaged around 1.3 percent, the bank said after the quarterly meeting of its Monetary Policy Committee (MPC).
The bank’s estimate of potential output growth was also revised down from 1.9 percent to 1.5 percent for 2016, and from 2.1 percent to 1.6 percent for 2017.
Although there was a marginal increase in the bank’s leading business cycle indicator in November, the trend remains negative, consistent with the subdued outlook.
The global growth outlook appears to have worsened somewhat in recent weeks, contributing to a correction in global equity markets, SARB Governor Lesetja Kganyago said.
Although most of the downward revisions to global growth have been due to the deteriorating prognosis for emerging markets, more recently the risks of a slowdown in the U.S. have increased, amid declining consumer expenditure, and the impact of low oil prices and a strengthening dollar on business investment, said the governor.
While the recovery in the Euro area remains modest, the growth forecasts for the UK and Japan have generally been revised down.
Coupled with the above factors, South Africa’s domestic economic growth outlook remains weak, Kganyago said.
Emerging market growth prospects, particularly for commodity-producing countries, remain constrained amid persistent capital outflows, according to the governor.
There is also uncertainty regarding the efficacy of policy reforms that have been undertaken, Kganyago said.