DAVOS, SWITZERLAND, Jan 21- The South African Treasury has reacted cautiously to the International Monetary Fund (IMF)’s decision to lower its forecast for South Africa’s economic growth in 2015 to 2.1, a drop of 0.2 percentage point from the forecast it made in October 2014.
The IMF has also reduced forecast for growth for next year to 2.5 per cent, down by 0.3 percentage point.
The gloomy outlook comes as business people and world leaders gathered in the Swiss mountain ski resort of Davos for this year’s World Economic Forum (WEF) meeting.
Speaking to the South African Broadcasting Corporation (SABC), Finance Minister Nhlanhla Nene said the negative outlook should force the government to seek ways to boost economic growth.
He said South Africa needed to work at addressing the structural challenges at hand. “We need to boost up our industrialisation agenda, roll out our infrastructure programme to attract investors and promote inclusive growth,” Nene added.
Meanwhile, RMB Global Market Research, the research unit of South Africa’s Rand Merchant Bank (RMB), said its outlook on South Africa remained bearish. “While the oil price will provide a much-needed reprieve in the short term, export prices remain depressed,” it added.
It said structural constraints on electricity supply, transport infrastructure and labour productivity would continue to plague the economy for the foreseeable future.