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Progress in South Africa, challenges too

Thursday, December 18, 2014 - 02:18

A new IMF report says South Africa can celebrate significant progress in its first 20 years of democracy, but - amid power blackouts and fears of more credit rating downgrades - it still faces big challenges in reviving a weak economy. Hayley Platt reports.

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It's a familiar scene in South Africa's largest city Johannesburg. Unemployed labourers touting for work. Still the country has made significant progress in the 20 years since becoming a democracy. That's been acknowledged in a new report by the IMF. Although it warns of difficult challenges ahead. Laura Papi is from the IMF's African Department. (SOUNDBITE) (English) LAURA PAPI, ASSISTANT DIRECTOR, AFRICAN DEPARTMENT, INTERNATIONAL MONETARY FUND (IMF) SAYING: "Some of the most recent data points have been quite encouraging, signalling a recovery from the slides earlier in the year. However, we do still see the growth is still subdued, and we are projecting 1.4% of growth this year and 2.1 for next year." It says South Africa is suffering from a number of deep economic and social challenges. A lack of investment in its infrastructure has led to a some of the worst power cuts in six years. Black-outs have become a frequent reality and although most of the population is connected to the national grid around 15 percent of the poorest are not. The situation has raised fears of credit downgrades. It narrowly escaped one at the weekend from Fitch. And S&P and Moody's already downgraded South Africa earlier in the year. Darren Sinden is from Admiral Markets. (SOUNDBITE) (English) DARREN SINDEN, ADMIRAL MARKETS UK, SAYING: "I suspect that we'll see the status quo in South Africa for some time to come. We'll see ongoing labour unrest. We saw a big strike amongst the platinum mine workers for better conditions and higher wages. But I think investors that are going to put money in South Africa will be well aware of both the political risk and the economic outlook for the country." The platinum mine strikes, which ended in June after five months, were the longest in the sector the country has ever known. Estimated to have hit 40 percent of global production and costing the mine owners millions in lost revenue. But the miners settled in the end for an annual wage increase of 20 percent, and the IMF says South Africa is making all the right noises. In October, the government announced a five-year economic plan. It will include tax rises and job freezes in the public sector, aimed at curbing the deficit to 4.1 percent of GDP forecast for 2014/2015.

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Progress in South Africa, challenges too

Thursday, December 18, 2014 - 02:18