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World Bank projects paltry GDP growth for SA in 2019

10 January 2019

South Africa's real GDP growth will expand by a paltry 1.3% in 2019, according to a World Bank projection, putting it among the worst performers in sub-Saharan Africa.

The report was markedly more pessimistic than a year ago - when the outlook was for synchronized global growth - and peppered with exhortations to take "urgent", "imperative" or "critical" action.

The World Bank has released its 2019 economic forecast, warning of "darkening skies" and greater risks to expansion. The report says that most world economies stare at dark times in this financial year.

The forecasts fall below the 7-8% target the government has set annually until 2022.

Ms Georgieva will serve as the interim President of the World Bank after Jim Yong Kim departs the global financial institution on February 1.

"India's recent growth numbers suggest that the economy remains robust despite temporary setbacks (due top demonetisation and GST)", Mr. Kose said. In 2018-19, China's GDP is expected to grow at 6.5 per cent.

According to the report, India's GDP is forecast to grow by 7.3% in FY2018/19 and 7.5% thereafter, in line with June forecasts.

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The World Bank's forecast compares with the Asian Development Bank's 6.4% and 6.7% estimates for 2018 and 2019, respectively, the International Monetary Fund's (IMF) 6.5% and 6.7%, and 6.7% of the Organization for Economic Cooperation and Development for both years.

"We hope to counter global headwinds with strong domestic demand: BBB (Build, Build, Build) program, consumption (including election spending), domestic investment and FDIs (foreign direct investments) - the latter two helped by the EoDB (Ease of Doing Business) law and the reduced 11 FINL (Foreign Investment Negative List)".

But the sharp decline in global equities markets at the end of past year showed the uncertainty generated by the trade conflict undermines business confidence and slows investment, Kose said. "Global financing conditions have tightened, industrial production has moderated, trade tensions have intensified, and some large emerging market and developing economies have experienced significant financial market stress", the bank said. Growth for this group is anticipated to hold steady at a weaker-than-expected 4.2 percent this year.

The bank slashed its forecast for 2019 growth for Turkey, Argentina, Iran and Pakistan, among others.

"The challenging political environment could adversely affect the ongoing reform agenda and economic activity in some countries", it added.

"Now debt service is eating into government revenues, making it more hard (for governments) to fund essential social services", said World Bank CEO Kristalina Georgieva, who will replace bank president Jim Yong Kim on an interim basis when he leaves at the end of January.

World Bank projects paltry GDP growth for SA in 2019