Goldman forecasts South African economic rebound in 2019

Goldman Sachs expects South Africa‘s economy to grow almost 3% next year, helped by President Cyril Ramaphosa‘s reforms and strong global growth, the bank‘s sub-Saharan Africa head told Reuters.

Colin Coleman‘s prediction is more optimistic than the view held by economists polled by Reuters last month, who saw Africa‘s most industrialised economy growing 1.7% in 2019 after sluggish growth of 0.8% this year. Ramaphosa’s reform drive suffered a setback last month when data showed the economy entered recession in the second quarter, but he has since unveiled a “stimulus and recovery plan” to try to get it back on track.

Coleman said in an interview that this was a “shot in the arm” which had encouraged investors by giving certainty on mining and visa rules and by emphasising skills development and education, areas where South Africa lags other African states.

“Part of the reason why Goldman Sachs is quite bullish on our ability to get back to 2.8% growth next year and 3.2% in 2020 is that the global backdrop is constructive. The two largest economies, USA and China, are doing well,” added Coleman, who heads Goldman’s Johannesburg office.

Since the upbeat mood that accompanied Ramaphosa’s replacement of Jacob Zuma in February, business confidence has fallen as the scale of the challenges facing him became clear. One area of particular concern has been struggling state-owned firms, several of which were embroiled in corruption scandals during Zuma’s nine years in power and which have been grappling with severe liquidity challenges.