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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Power cuts slash South Africa economic growth: Reserve Bank

by Zodidi Mhlana JOHANNESBURG South Africa (Xinhua) -- The South African Reserve Bank has said that the country’s gross domestic product (GDP) growth could dwindle by 1.1 percentage points, if rolling power outages experienced in March persist throughout the year.

The bank released its Monetary Policy Review on Wednesday night saying "Load shedding is a risk to 2019 growth and if it continues all year, growth is likely to be lower by 1.1 percentage points, which would be worst performance since 2009."

Indebted state owned power utility Eskom implemented stage 4 load shedding last month for over two weeks as it struggled to keep the lights on due to boiler tube leaks and reduced water levels in Eskom’s hydro.

The Bank said that over 125,000 jobs could also be lost if the problem is not solved.

The Reserve Bank had earlier projected that the economic growth could grow at 1.5 percent for this year, but it has since revised this forecast to 1.3 percent.

Economists estimate that the country loses 2 billion rands (about 142 million U.S. dollars) every day as a result of load shedding.
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UPDATE:

International Monetary Fund lowers growth forecast for South Africa

JOHANNESBURG South Africa (Xinhua) -- The International Monetary Fund (IMF) on Tuesday lowered its forcast for South Africa’s economic growth in 2019, from 1.4 percent to 1.2 percent, citing policy and political uncertainty.

In its world economic outlook, the IMF said South Africa should prioritize eliminating wasteful expenditure on state-owned enterprises and reduce public wage bill.

"The projected recovery reflects modestly reduced but continued policy uncertainty in the South African economy after the May 2019 elections," the IMF said. "Structural reforms, particularly to product and labor markets, would foster an environment conducive to expanding private investment, job creation, and productivity growth."

It said structural bottlenecks will continue to weigh on investment and productivity, and that metal export prices are expected to remain subdued.

The IMF also called on South Africa to exercise fiscal consolidation to stabilize government debt.

It also cut its forecast for South Africa’s economic growth in 2020, from 1.7 percent to 1.5 percent.

In February, the South African Reserve Bank lowered its 2019 gross domestic product growth forecast, from 1.7 percent to 1.3 percent.

The central bank’s forecasts for the country’s 2020 and 2021 GDP growth are 1.8 percent and 2 percent respectively.
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EARLIER REPORTS:

Moody’s warns South Africa about rising debt and poor economic growth

JOHANNESBURG South Africa (Xinhua) -- Rating agency Moody’s has warned that persistent low economic growth and stubborn unemployment are among key economic problems in South Africa.

Moody’s annual report released on Tuesday said the government should also deal with its debt as debt is projected to increase further.

The report stated that the state’s debt was likely to reach 65 percent of the gross domestic product by fiscal year 2023 under the baseline scenario.

It warned that the continued bailouts of state-owned entities would burden the government’s credit profile.

"The credit profile would face downward pressure if Moody’s expects that government’s debt and contingent liabilities risk from SOEs will continue to rise to levels no longer consistent with a Baa3," the report said.

Early this month, the agency decided to keep the country’s sovereign rating unchanged at Baa3 with a stable outlook.

Jannie Rossouw, head of business school and science at Wits University told Xinhua that "Moody’s warnings to the government is serious."

Rossouw said the government should reduce its expenditure in order to tackle its debt.

"They can’t continue spending the way they have been spending over the past ten years.

"They must give smaller salary increases and stimulate economic growth as that will boost revenue collection," he added.

With the general election due to take place in May, Moody’s said it was expecting these challenges to be properly dealt with by the government.

Moody’s is projecting that the economic growth would be at 1.3 percent in 2019, after registering a 0.8 percent growth last year.
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South Africa warns against growth of nationalist
and isolationist tendencies in Western countries

CAPE TOWN South Africa (Xinhua) -- South Africa on Wednesday warned against a growth of nationalist and isolationist tendencies in the West.

Such tendencies are coupled with a sense of impunity and "going it alone attitude," for example on issues of climate change, the Ministry of International Relations and Cooperation said in its foreign policy review.

"Further, there is a growing tendency of powerful countries to reduce complex and interrelated problems of the world to narrow national interests, including militarist and transactional approach to diplomacy," said the report.

The immediate consequence of all these are trade wars, occasioning global market volatilities as well as the flagrant disregard of important international treaties, the report said.

These have serious negative impact on the United Nations and the multilateral global governance system in general, the report noted.

The report pointed to a series of political, social and economic dynamics that have opened major divisions in the traditional Western alliance.

South Africa believes in the reform of the UN and other multilateral global governance system so that these are democratic, inclusive and fully represents the nations of the world, big and small.

"For the past two-and-half decades, South Africa, working with other countries of the South, continued efforts at ensuring that the entire global governance system is transformed," the report said.

While acknowledging the benefits brought about by globalization such as faster transmission of technology and innovation, and the potential to accelerate regional, continental and global economic integration and development, the report said the process of globalization has still not benefited a large number of developing countries, but has instead exacerbated the marginalization of poor countries, with many having become poorer in recent years.

There is a growing sense that only a few are reaping the promised dividends of globalization, the report said.

"Not only has the gulf between developed and developing countries widened, but the wealth of rich elites and the rest of society within many countries keeps growing," said the report.

             

 

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