Merrill Lynch slashes SA’s growth forecast on recession news
Weak growth means risks of fiscal slippage, says the bank, adding that uncertainty around land reform continues ‘to deter investment’
Merrill Lynch has slashed its growth forecast for SA following the shock GDP figures, which showed the country is in a recession. In a report released on Wednesday, the bank cut its growth forecast to 0.9% from 1.6%. It also revised its growth forecast for 2019 from 1.8% to 1.5%. As some economists warn of the wrath of credit rating agencies, Merrill Lynch said SA will likely continue to get a reprieve this year. However, the government will come under intense scrutiny over the next few months. "We expect no rating changes during November reviews but further revenue shortfalls, increasing populist pressures and a need for state-owned enterprise (SOE) bailouts could raise downgrade risks after the February budget," reads the report.
Weak growth implies there are risks of further fiscal slippage during the medium-term budget policy statement at the end of October, Merrill Lynch said, and also warned of the continued uncertainty around land reform, stressing that "current uncerta...