Johannesburg - The International Monetary Fund slightly dimmed South Africa's 2012 growth forecast to 2.6% on Thursday and warned that chronic joblessness was a risk to the continent's biggest economy.
"If not addressed, the stubbornly high unemployment rate could become politically and socially unsustainable," an IMF report said.
Released after a visit by IMF representatives three months ago, the study also warned of external risks from the eurozone and a Chinese slowdown that could see less demand for exports and a further decline in commodity prices.
The Fund revised lower a forecast for growth of 2.7% issued in May.
"Although the 2012 GDP growth rate is likely to moderate to about 2.6% given the weak external conditions and heighted global uncertainty, it is projected to gradually recover over the medium term to its potential rate of about 3.5%," it said.
The forecast for 2013 was cut from 3.6% to 3.4%.
Some key domestic risks identified were the high unemployment rate, which officially hovers around 25%, and the ballooning cost of public sector wages.
"The growing public sector wage bill is a concern and the composition of spending needs to be rebalanced away from the wage bill and toward capital spending," said the report.
The National Treasury welcomed the assessment, saying "many of the issues raised by the IMF report are already reflected in the priorities and outcomes that government has set itself".
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