Pretoria: Government has welcomed the International Monetary Fund’s assessment that South Africa has a stable and resilient economy but one that could do better, said National Treasury.
The IMF on Thursday released the outcome of its Article IV Consultation with South Africa, following a staff visit from 23 May to 5 June.
In the report, the IMF said South Africa’s growth forecast was revised down to 2.6% from an initial 2.7% in May.
“This is marginally below National Treasury’s forecast made during the tabling of the budget in February of 2.7% for 2012 and 3.6% for 2013,” noted Treasury.
The report also highlighted external risks to the outlook, including renewed concerns about the Euro area and signs of a slowdown in China that could result in slower demand for South African exports and a further decline in commodity prices. Although the sources of risk are mainly external, domestic risks are also identified.
The report welcomed the focus on job creation in the New Growth Path (NGP) and the draft National Development Plan (NDP) was welcomed but needed to be supported with concrete actions. The IMF suggests that the structure of product and labour markets may make it difficult for South Africa to reduce unemployment.
The growing public sector wage bill was highlighted as a concern, while the Fund added that it supported the current monetary policy stance and found that inflation targeting has been crucial for South Africa’s resilience to changes in the global environment.
“The South African government welcomes engagement opportunities with institution such as the IMF as well as others like the World Bank and the OECD,” said Treasury.
It added that many of the issues raised by the IMF report were already reflected in the priorities and outcomes that government had set itself, including work on inclusive growth and policies aimed at accelerating job creation.