The IMF Has Rated South Africa’s Economic Recovery Is Shaky

The International Monetary Fund (IMF) warned on Friday that South Africa’s economic recovery remains weak, with growth anticipated to stay around 2% in the medium term due to policy uncertainty, high public debt, and investment limits. The IMF noted in a statement released after talks with South Africa that the country’s recovery from the COVID-19 epidemic had been faster than predicted, but that its long-term viability remained dubious.

The National Treasury Remains Positive

The National Treasury of South Africa replied by saying it was “somewhat more positive” than the IMF about the medium-term economic forecast, predicting a gradual rebound in investment and confidence. “The National Treasury recognizes the difficult crossroads in which South Africa finds itself,” it said in a statement, adding that it was committed to decreasing public debt and budget deficits.

After a 4.6 %comeback in 2021, the IMF expects South Africa’s economy to grow at 1.9 %in 2022, before slowing to 1.4 %in the long term. In its Friday release, the National Treasury did not include the most recent growth predictions.

“The recovery is considered shaky since it has been accompanied by rising unemployment, sluggish bank lending to the private sector, and low private investment. Despite the recovery in growth, poverty and inequality have not improved “According to the IMF statement.

The IMF directors praised the government for its robust policy response to the epidemic. However, it goes on to point out several areas where it might be able to make some improvements. The approaching budget on Feb. 23 allowed tangible steps to restrict public sector pay, rationalize state company bailouts, reduce tax expenditure, and better target education subsidies, according to the report.