South Africa’s economic recovery will be “weak and choppy” this year after growth dropped below initial expectations, the central bank said on Wednesday, underlining the challenge facing President Cyril Ramaphosa’s reform programme.
Ramaphosa, who replaced scandal-plagued Jacob Zuma as head of state in February, has staked his reputation on boosting growth and wooing foreign investors after a decade of economic stagnation.
In July the South African Reserve Bank (SARB) cut its 2018 growth outlook to 1.2 percent, lower than an earlier forecast for 1.7 percent, after a string of disappointing economic data in the first half of the year.
In a presentation to a parliamentary committee, the SARB reiterated its cautious outlook.
“The South African economy remains vulnerable,” the presentation said.
“The recovery in economic activity is expected to be weak and choppy, especially as consumer demand, a historical driver of upswings, slowed anew in Q2 2018.”
The SARB, which held interest rates steady at 6.5 percent at its last monetary policy meeting in July, added that fixed investment was not expected to pick up meaningfully this year.
It said that inflation risks remained on the upside, citing a weaker rand, rising oil prices and above-inflation wage hikes among the main risks.
The SARB expects inflation to average 4.8 percent this year, 5.6 percent in 2019 and 5.4 percent in 2020.