IMF expects SA's economic recovery from COVID to continue this year
In a statement released following an IMF staff visit to South Africa, the institution said despite the positive outlook, it continued to be concerned with load shedding, failures in the transport system, rising inflation and corruption.
JOHANNESBURG - The International Monetary Fund (IMF) said the South Africa's economic recovery from the COVID-19 pandemic should continue this year - as sectors that have been lagging would mitigate against the impact of local events, which had a devastating impact on the economy.
In a statement released following an IMF staff visit to South Africa on Tuesday, the institution said despite the positive outlook, it continued to be concerned with load shedding, failures in the transport system, rising inflation and corruption.
The conclusion of the visit comes as Stats SA announced that gross domestic product had risen by 1.9% in the first quarter of the year.
The IMF said while the KwaZulu-Natal floods, the war in Ukraine, the tightening of global financial conditions and China's economic slowdown posed a challenge to South Africa's growth and price stability, there were some considerations that could offset the impact of these factors.
Among the proposals, it states that South Africa needs to urgently remove obstacles to private investment and encourage competition to reignite economic growth in the medium term.
The performance of the manufacturing sector in the first quarter of the year with an increase of 4.9% could be a case in point.
Chief economist at Don Consultancy Group, Chifipa Mhango, said: "Definitely, the challenges are limiting the growth of the manufacturing sector in terms of growth and potential. The challenges are electricity costs and supplies, which are limiting its potential. And of course, logistical inefficiencies are limiting potential as well."
Trade, catering and accommodation are industries the IMF said it expected to see an uptick in - an increase by 3.1% contributing to 0.4 percentage point to GDP growth in the first quarter of the year.