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Cape Town - Electricity shortages, low commodity prices and low consumer and business confidence will continue to restrain South Africa’s economic growth, the African Development Bank (AfDB) said.
In its economic outlook report released on Monday, the AfDB said South Africa’s gross domestic product growth rate is expected to weaken to 0.7% in 2016.
“Persistent shortages in electricity have had a knock-on-effect on the economy,” said the AfDB, adding that “limited electricity supply has also weighed down manufacturing, mining and service-sector activity”.
AfDB also said the worst drought in two decades has continued to devastate agriculture, whose real proportion of GDP has been reduced by 16.2%. Grain production is expected to decline by more than 50%.
The report said “slow progress in delivering economic and social services in townships and rural areas remains one of the major challenges to government”, adding that “South African cities are dynamic poles of socio-economic activity facing inequality and environmental risks".
“South African cities are the continent’s most unequal, with a Gini coefficient of 0.76 in urban areas,” it said, adding that 22% of households in towns and cities are poor, with a monthly per capita income of less than R620.
Rapid implementation of the National Development Plan is, however, projected to yield real GDP growth of 1.7% in 2016, rising to 2.6% in 2017 and 2.8% in 2018.
