The International Monetary Fund (IMF) has warned that South Africa is trailing other emerging markets and must quickly implement reforms if it wants to avoid a crisis.
The IMF, which published its annual country report on Africa's largest economy on Tuesday, predicts growth this year to slow to two percent and to recover only slightly to three to 3.5 percent in the next few years.
The rand has been one of the worst performing emerging market currencies in 2013, it said, and bond yields rose sharply in May and June as concerns over the U.S. Fed's tapering of quantitative easing and China's growth outlook led to rising global risk aversion and weaker commodity prices.
"South Africa's growth has underperformed and vulnerabilities have increased considerably," the IMF explained, adding, "Absent structural reforms, growth will be insufficient to reduce unacceptably high unemployment," pointing an economy "increasingly vulnerable to shocks."
South African Finance Minister Pravin Gordhan and President Jacob Zuma have frequently blamed the country's poor growth on global conditions and weakness in its main trading partners. The IMF however emphasised the role of domestic problems and urged authorities to push through structural reforms.
"Quicker implementation of much-needed structural reforms could result in higher growth and job creation," the IMF said before warning, "Risks are tilted firmly to the downside."
To see the full report visit http://www.imf.org/external/np/sec/pr/2013/pr13373.htm.
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