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World Bank sees lower SA growth

Jul 24 2012 21:46

Johannesburg - Growth in South Africa for 2012 is likely to be lower than earlier expected, the World Bank said on Tuesday, a day after Finance Minister Pravin Gordhan said the government would also lower its forecasts.

"A weakened global economy and dampening of consumer and business confidence are triggering a slowdown in South Africa's growth momentum," the World Bank said in a report, cutting its growth forecast to 2.5% from the 3.1% seen last November.

"South Africa is highly integrated with the global economy, and is therefore susceptible to the ongoing slowdown in the eurozone countries and China, the two principal export destinations for its goods and services," said World Bank country director Asad Alam.

Expansion in Africa's biggest economy is likely to miss the government's current forecast of 2.7%, Gordhan said on Monday, while the central bank sounded a warning about its vulnerability renewed global weakness.

The World Bank report said South Africa's progress toward universal access to basic opportunities had seen mixed results, with impressive gains made in access to primary education, electricity and telecommunications.

But there were still inequalities in the provision of water, sanitation, health insurance and employment opportunities.

"The employment situation is especially challenging for the younger labour force, residents of townships/informal settlements and rural areas, and the non-white segments of the population," it said.

President Jacob Zuma's government has in the last few years grappled with often violent protests in poor townships by blacks bitter that they still have poor access to water, sanitation and housing 18 years after the end of white minority rule.

The government has singled out an unemployment rate of 25% as one of its major challenges, and economic growth remains far below the 7% needed to significantly slash the jobless rate.

"The policy challenge is to find a way to break this vicious, self-perpetuating cycle of inequality in South Africa," the World Bank report said.

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