The International Monetary Fund (IMF) has lowered its growth forecast for South Africa this year and warned that the economy could "underperform" if labour unrest persists and the business environment deteriorates.
There is widespread concern that there will be more turmoil in the mining sector when wage negotiations in the gold and coal industries start in April.
A decision by Anglo American Platinum to cut 14,000 jobs after mothballing shafts and suspending processing plants sparked a short, illegal strike last week.
President Jacob Zuma insisted on Wednesday at the World Economic Forum in Davos, Switzerland, that the worst of the labour unrest was over. "Yes, we have seen the worst, we are dealing with the matter."
Business, labour and the government were discussing the issues involved as SA could not go back to a situation which created the impression that it had no governance, Mr Zuma added.
In its latest World Economic Outlook released on Wednesday, the IMF revised its growth forecast for SA this year down to 2.8% from a 3% estimate in October.
The IMF’s senior resident representative in SA, Axel Schimmelpfennig, said on Wednesday that one of the reasons for the revision was the fact that labour unrest was continuing longer than the IMF had previously factored in, affecting production, exports and investor confidence.
"We continue to assume that these effects are temporary. However, our forecast is subject to significant downside risks and if the labour unrest persists and the business environment deteriorates, SA’s growth could underperform," he said.
The Washington-based lender revised its growth forecast for SA next year up by 0.3 percentage points to 4.1% — well above market consensus and official estimates.
The Treasury sees the economy expanding by 3.8% next year, while the Reserve Bank expects growth of 3.6%.
Mr Schimmelpfennig said the optimistic estimate reflected an "anticipated rebound" from this year, but was subject to the "same downside risks" from labour unrest.
SA’s sovereign credit rating has been downgraded three times in the past few months, with rating agencies citing the risk that social instability could deepen due to the high unemployment rate and wide income disparities.
"The IMF is concerned about the underlying causes of the social unrest and its impact on economic developments," Mr Schimmelpfennig said.
He said implementation of the government’s National Development Plan should "go a long way" to addressing the issues at the heart of the social unrest.
The IMF was "encouraged" by the prominence the plan was given at the African National Congress conference in Mangaung last month, he said.
Global growth will strengthen gradually, quickening to 3.5% this year from 3.2% last year and accelerating to 4.1% next year, the IMF said in its World Economic Outlook.
It predicts that production from the eurozone, one of SA’s main trade partners, will expand by 1% next year.
Policy actions had lowered acute crisis risks in the eurozone and the US, and supported a modest growth pickup in some emerging market economies, the IMF said.
"If crisis risks do not materialise and financial conditions continue to improve, global growth could be stronger than projected," the IMF said.
"But downside risks remain significant, including prolonged stagnation in the euro area and excessive short-term fiscal tightening in the US."
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