South Africa’s economic growth will accelerate to 1.3 percent in 2019 from an estimated 0.9 pct in 2018, the World Bank said on Tuesday citing the implementation of structural reforms announced last year.
The World Bank projects South Africa’s economic growth at 1.7% in 2020, and 1.8% in 2021.
Economic growth would be supported by the implementation of structural reforms such as relaxed visa regulations, establishment of an infrastructure fund and progress on the Mining Charter, the bank said.
The Washington-based bank said higher growth in 2020 reflects the expectation that the government’s structural reform agenda will gradually gather speed, helping to boost investment growth, as policy uncertainty recedes and investor sentiment improves.
The Bank, however, said South Africa faced risks such as El Nino weather conditions that could impact crop production, global trade tensions and the impact of cash-strapped state-owned enterprises like power utility Eskom on the national budget.
“What government has to do is to work with the management and leadership of Eskom to figure out the way forward,” said Paul Noumba Um, the World Bank’s country director for South Africa.
Eskom’s debt has grown to nearly 15 times its Ebitda (earnings before interest, tax, depreciation and amortization). Interest payments on this debt consume around 90 per cent of Ebitda.