World Bank slashes SA growth forecast
'This recovery prospect will remain fragile unless SA succeeds in bending the curve of productivity'
The World Bank has halved its growth outlook for SA and has flagged dwindling productivity as a major threat to growth.
Speaking at the presentation of the World Bank's 10th edition of the SA Economic Update on Tuesday‚ Sebastien Dessus‚ the World Bank programme leader said the bank had revised growth down to 0.6% for 2017. In January‚ the World Bank forecast GDP growth of 1.1%.
The downward projection follows the technical recession from which the economy has since emerged‚ and the credit rating downgrades earlier in 2017.
The bank expected growth to improve to 1.1% in 2018‚ and 1.7% in 2019 on better commodity prices and stronger household spend.
"However‚ this recovery prospect will remain fragile unless SA succeeds in bending the curve of productivity‚" Dessus said.
At least for four years in a row GDP growth will be lower than population growth.
Slow growth in 2016 and this year is likely to further prolong a trend of increasing poverty recorded between 2011 and 2015‚ the World Bank said.
Growth has been dragged down by productivity losses‚ which had cost the economy 0.7% in foregone GDP growth annually since 2008. Private investment in research and development (R&D) has declined 40% in SA since 2008. "And that's very worrisome‚" Dessus said.
R&D in SA is concentrated in manufacturing.
The study found that SA had been lagging in total productivity levels relative to its Brics peers since 2000.
SA's top five exports per technology type have changed little over the past seven years. Only 7% of exports are high tech.
The World Bank said productivity gains in gold‚ social housing and machinery equipment would have the most significant effect on job creation. A 1% gain in productivity would increase demand for jobs by 0.2%-0.25% and real wages by 0.9%-1.8%‚ the study found.