JOHANNESBURG – South Africa’s economy is poised for a turnaround after years of slow growth, a Cabinet minister said Monday. However, new data showing an increasing rate of unemployment highlighted the challenges that beset one of Africa’s biggest economies.
Assessments by Moody’s Investors Service and the International Monetary Fund show the South African economy “is on the right track and that our turning point is near,” said Jeff Radebe, the planning minister and government spokesman. Radebe spoke at a Johannesburg meeting hosted by the Foreign Correspondents’ Association.
Last week, the IMF said it projects 0.6 per cent economic growth in South Africa this year and a “muted recovery” beginning next year.
“Risks to this outlook are tilted to the downside and include further shocks from China, heightened global financial volatility, and sovereign debt credit rating downgrades,” Laura Papi, the IMF’s mission chief for South Africa, said last week.
She said South Africa had taken “appropriate steps” to counter rising government debt and inflation, and noted progress in curbing electricity power cuts, a drag on productivity.
Also last week, Moody’s did not downgrade South Africa’s credit rating as some South Africans had feared, though the agency cited a “negative outlook” because of risks. Moody’s expects growth to increase to 1.5 per cent in 2017.
South Africa is awaiting investment ratings from two other agencies, S&P and Fitch.
The unemployment rate was 26.7 per cent in the first quarter of this year, up by 2.2 per cent from the fourth quarter of 2015, according to government statistics released Monday.
President Jacob Zuma has also been the target of corruption allegations, raising concerns about clean governance. Moody’s, however, said a constitutional Court ruling against Zuma in a scandal over millions of dollars in state spending on his private home indicated the strength of South African institutions.