South Africa revises down economic growth forecasts for 2016

According to media reports, South Africa’s National Treasury reported in its Medium Term Budget Policy Statement (MTBPS) that they revised down economic growth forecasts to 0.5% for this year from their earlier estimate of 0.9% in February amid ongoing political turmoil, muted global demand and low commodity prices.

The country’s Finance Minister Pravin Gordhan said that the government should take some measures to speed up the NDP (National Development Plan) reforms and to reduce policy uncertainty in order to pick up the economic growth.

Gordhan added that the Treasury will need to raise an additional 43 billion rand ($3.1 billion) in tax revenues in the next two years, as part of the government’s efforts to avoid a downgrade in credit ratings. The rating agencies, including S&P Global Ratings, Fitch Ratings and Moody’s, will review the country’s credit rating in the next few months while the weak growth rate, increase in the country’s debt and political risk factors are the main adverse affects that will have a role in the agencies’ decision.

Gordhan also reported that the country’s economic growth may accelerate to 1.7% next year and to 2.2% by 2019 in line with their expectations of lower inflation, stronger global growth and stabilization in commodity prices.