South Africa set for growth take-off if reforms happen, IMF says
South Africa could drastically boost economic growth if it fixes its ailing energy and logistics sectors, and reduces crime, a top International Monetary Fund official said.
With its abundant natural endowments and strong institutions, South Africa “is poised for a growth take-off if reforms that resolutely and courageously tackle structural obstacles are implemented,” Gita Gopinath, the fund’s first deputy managing director, told the South African Reserve Bank’s Biennial Conference in Cape Town on Friday. Addressing crime, education, electricity shortages and logistic constraints “are clear areas where if there is improvement you could see a substantial effect on growth,” she said.
Growth could be 2.5% to 3% higher per year with the reforms, Gopinath said in an interview.
South Africa’s gross domestic product grew 1.9% last year and is set to expand just 0.3% in 2023, IMF estimates show, with power utility Eskom Holdings SOC Ltd.’s inability to meet demand and port and rail bottlenecks limiting output.
Gopinath also urged South Africa to improve the performance of state-owned companies in critical sectors and allow for private sector participation, which would save it money and enhance the provision of the public services at a time when the government has limited fiscal space.
“In the case of Eskom, there are important operational issues and financial issues that need to be fixed,” she said in the interview. “That is critical to make it a viable institution and to be able to deliver on the public service.”
