IMF expects South Africa's growth to stabilize at 1.4% in medium term

By Ovunc Kutlu

ISTANBUL (AA) - The International Monetary Fund (IMF) said Wednesday that it expects South Africa's economic growth to stabilize at 1.4% in the medium term.

Economic growth slowed to 0.7% in 2023, partly due to widespread power shortages and disruptions at rails and ports, the IMF said in a report after its executive board concluded post financing assessment discussions with South Africa.

Growth is forecast to reach 1% in 2024 with improved investor sentiment and electricity generation, according to the IMF.

"The new government of national unity that took office in June faces significant challenges, including declining real per capita growth, high unemployment, poverty, and inequality, and a rising level of public debt," said the report.

"The new administration has committed to address these challenges by continuing ongoing structural reforms aimed at addressing supply constraints and bolstering inclusive growth, while maintaining fiscal discipline," it added.

While inflation declined to the South African Reserve Bank's 3%-6% target range last year, it moderated further to 5.1% this June, said the IMF.

The financial agency said it anticipates inflation declining toward the mid-point of the central bank's target range in the second quarter of 2025.