Economic growth in South Africa is projected to rebound after a significant plunge last year although shocks still abound.
According to the International Monetary Fund (IMF), real gross domestic product (GDP) growth in South Africa is projected to record a moderate rebound to grow at 2.1 per cent in 2015.
In 2014, the country recorded a growth of 1.5 per cent due to protracted strikes, electricity shortages and soft external demand.
“South Africa holds great promise and opportunity, but at the same time it faces great challenges, in particular, to accelerate growth, create jobs for the millions of people out of work, and reduce inequality,” said David Lipton, IMF First Deputy Managing Director after concluding his visit to the country.
He added that although lower oil prices are reducing South Africa’s inflation and the current account deficit, structural bottlenecks continue to hamper growth.
“With past growth drivers having run their course, constrained policy space, and growing infrastructure bottlenecks, a decisive period of reform is essential,” he noted.
Some of the reforms that South Africa should prioritise include overcoming the debilitating problem of electricity shortages, improving industrial relations and the functioning of the labour market and enhancing education and training quality.
The country should also reduce skill mismatches, boost competition and trade and facilitate the entry of new companies to create more job opportunities.
“Bold leadership is needed by all stakeholders to address these challenges. Business, labour and government each have a role to play. Working together is key to revitalizing the South African economy and making it truly inclusive,” said Lipton.
During his visit, Lipton held talks with Finance Minister Nhlanhla Nene, Minister for Cooperative Governance and Traditional Affairs Pravin Gordhan, and South African Reserve Bank Governor Lesetja Kganyago. He also met representatives of labour unions, business and academia.
International Monetary Fund (IMF)