Picture: THINKSTOCK
Picture: THINKSTOCK

HIGH unemployment and slow progress in attracting investment into South Africa has prompted analysts to trim their forecasts for growth in the region’s biggest economy, a Reuters poll showed on Thursday.

Economists trimmed their projections for South African economic growth next year for a second straight month, to 2.8% from 2.9% last month, while they shaved their outlook for 2015 to 3.2% from 3.4%.

Still, that would be stronger than the 2% expansion expected for this year.

Local electricity constraints and economic weakness in Europe, South Africa’s biggest trading partner, were just some of the obstacles to boosting exports and creating private-sector jobs.

"Even as the global economy shows tentative signs of recovery, structural constraints will keep growth in check in South Africa," said Shilan Shah at Capital Economics in London.

"In particular, a lack of progress on labour market reform and raising investment levels means growth is likely to be constrained to about 2.5%-3% in the coming years," Mr Shah said.

The Reserve Bank said last month that South Africa’s economy needed to grow at a rate of 5% to make inroads into joblessness.

The number of unemployed rose to 4.723-million in the second quarter of 2013 — about a quarter of the labour force and the highest since the government started the survey in 2008.

The rand will likely stabilise against the dollar by this time next year but faces a choppy few months before the US Federal Reserve starts cutting back its monetary stimulus, according to a separate Reuters poll.

The current account deficit could shrink slightly due to a favourable currency rate for exporters, narrowing to a median 5.9% of gross domestic product in 2014 from 6.2% this year.

Reuters