IMF sees SA growing by 2.6%

The International Monetary Fund predicts that the South African economy will grow 2.6% in 2010 and 3.6% in 2011. The IMF said in the World Economic outlook that although the rebound in world trade is supporting recovery, growth will be tempered by high unemployment, tight credit conditions, and the recent strength of the rand.

The IMF predicts that consumer prices will grow 5.8% in both 2010 and 2011, while the current account is projected at -5.0% and -6.6% in 2010 and 2011 respectively.

The IMF noted that Sub-Saharan Africa has weathered the global crisis well, and its recovery from the slowdown in 2009 is expected to be stronger than following past global downturns. Although some middle income and oil-exporting economies were hit hard by the collapse in export and commodity markets, the region managed to avoid a contraction in 2009, growing by 2% last year.

The region's growth is projected to accelerate to 4.7% this year and to 6% in 2011.

The IMF said the region's quick recovery reflects the relatively limited integration of most low-income economies into the global economy and the limited impact on their terms of trade, the rapid normalisation in global trade and commodity prices, and the use of countercyclical fiscal policies.

Remittances and official aid flows have also been less affected than anticipated by the recessions in advanced economies. Banking sectors have so far proved generally resilient, and private capital inflows have resumed into the region's more integrated economies.

Shocks from the global crisis hit sub-Saharan Africa mainly through the trade channel. Reflecting their greater openness to trade, the region's middle-income economies were among the hardest hit.

Declining global demand and the collapse in oil prices also dealt a blow to the region's major oil exporters. Output growth in these economies slowed by 3.5 percentage points to 4% in 2009, although strong performance in the non-oil economy allowed Nigeria, the region's largest oil producer, to avoid a substantial slowdown.

The recovery of oil prices and stronger global demand will raise growth for these economies to 6.8% percent in 2010 and 7.1% in 2011.

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