South Africa Likely To Miss 1.5 Percent Growth Target

South Africa’s economic growth is unlikely to reach the treasury’s target of 1.5% in 2019 because conditions have changed and the country is facing increasing headwinds, Finance Minister Tito Mboweni said on Friday.

This week rating agency Moody’s, the last of the top three credit firms to rate South Africa’s debt at the investment level, said it had lowered its growth forecast to 0.7 percent from 1 percent.

The central bank sees the gross domestic product at 0.6 percent this year.

Both have cited slow economic reforms as the key drag on economic activity, and massive bailouts to state-owned companies, including 59 billion rands ($4.05 billion) to power firm Eskom.

This has limited the government’s scope for stimulus and raised debt while the resultant uncertainty has kept investment subdued.

“The assumptions underlying the forecasts have clearly changed … the actual deficit now is probably much higher,” Mboweni told a banking conference in Johannesburg.

He said that increasing calls for the treasury to bail out state firms were putting pressure on growth and spending.

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