OECD revises down SA’s growth forecasts
The Organisation for Economic Co-operation and Development (OECD) revised down its economic projections for SA for 2018 and 2019 on Thursday, citing low confidence, which it said reflected uncertainty about the future pace of economic reforms.
The OECD joins Goldman Sachs and several other organisations that have tweaked their projections after the local economy stumbled in the second quarter, dampening President Cyril Ramaphosa’s hopes of growing the economy by 3% in 2018.
Ramaphosa is under huge pressure to kick the economy into full gear and reduce the high unemployment rate, which has been a permanent feature since 1994.
The Paris-based organisation trimmed SA’s growth forecast to 0.9% for 2018, down from an earlier forecast of 1.9%. For 2019, the country’s growth is penciled in at 1.8%, down from 2.2%, predicted in May.
The OECD also cautioned that global economic growth may heave peaked. "[Global] economic growth prospects are now slightly weaker across the board than anticipated in May, when the OECD released its latest economic outlook," OECD chief economist Laurence Boone said in a statement.
"Escalating trade tensions, tightening financial conditions in emerging markets and political risks could further undermine strong and sustainable medium-term growth worldwide."
The global economy is now expected to grow 3.7% in both 2018 and 2019. In May, it had expected growth of 3.8% in 2018 and 3.9% in 2019.
The caution of a slowing growth comes amid a bruising trade spat between the US and China. Earlier in the week, the US imposed $200bn worth of tariffs on Chinese goods.