South African Economic Growth Projections For 2018

According to the World Bank, South Africa’s economy is expected to grow by just 1.1% in 2018- a vast improvement on growth levels in 2017. Following the erosion of investor confidence as a result of political instability and policy uncertainty, investors are soon likely to return to the table.  

There is no doubt that one of the key ways of ensuring South African economic growth is the maintenance of good relations between government and business.  

Investment in South Africa is affected by a range of factors. 

What South African economic growth projections for 2018 look like: 

Improving business sentiment supports a modest rise in investment. Despite this, South African policy uncertainty is likely to remain. 

Many African countries will be looking to China to continue buying their resources. South Africa, which has trade relations with the Chinese, is likely to increase exports to the Asian country, which is already the biggest importer of South African products. 

The Gross Domestic Product (GDP) is also expected to grow 1.7% in both 2019 and 2020. 

Market sentiment has improved following the election of Cyril Ramaphosa as President of the African National Congress (ANC) the governing party in South Africa. Investors have bet that Ramaphosa is likely to push through business-friendly policies. 

Growth recovery is also supported by an improvement in commodity prices, slowing inflation as well as favourable global financing conditions. The subdued long-term outlook for commodity prices is expected to keep investment rates in commodity exporters low. 

The South African economy is slowly gaining traction after exiting a technical recession. 

High unemployment will continue to weigh on fixed investment and private consumption. 

South Africa’s productivity growth is diverging. 

Overall, South African economic growth projections for 2018 indicate that investment is expected to recover only very gradually.