Picture: SUPPLIED
Picture: SUPPLIED

THE World Bank has added to the gloom on SA, taking its economic growth forecast slightly below two ratings agencies and the Reserve Bank.

It expects an "only modest" 1.4% growth this year, from 1.3% last year.

The bank cautioned, however, that this assumed commodity prices would stabilise and power constraints ease. It warned that the risks for SA and sub-Saharan Africa were "tilted to the downside".

The bank sees sub-Saharan Africa’s growth rate rising to 4.2% this year from 3.3% last year and projects an uptick in global growth from 2.4% to 2.9%, as advanced economies gain speed. But it said this week that "spillovers from major emerging markets will constrain growth in developing countries and pose a threat to hard-won gains in raising people out of poverty".

The bank’s forecasts for SA are 0.7 percentage points lower than those in its June report, but are in line with the Bloomberg consensus forecast of 1.3% for last year and 1.4% for this year.

This is, however, weaker than latest estimates for this year of 1.7% by Fitch Ratings and Moody’s, and 1.6% by Standard & Poor’s. All three ratings agencies warned last month that SA could face a downgrade if economic growth proved weaker.

Standard Bank economist Kim Silberman said the fact that the World Bank thought growth this year would be faster than last year was "quite positive".

Standard Bank’s view, by contrast, is that growth will slow from 1.4% last year to 1.2% this year. It expects real wages to decline and household consumption to grow 0.9%, from 1.5% last year. Ms Silberman said investment-spending growth was expected to decline 2.3%

The Reserve Bank’s most recent forecast, at the November monetary policy committee meeting, was revised down marginally to 1.4% for last year and 1.5% for this year. Bank officials have said that only 2% was needed in the fourth quarter to ensure 1.4% for the year. There was a shock contraction in the second quarter, but growth of 0.7% in the third quarter.