JOHANNESBURG (Reuters) - South Africa's economy will slow to just 0.8 percent in 2016, weighted down by uncertainty over policy, gaps in infrastructure and drought, the World Bank said on Tuesday.
The global bank cut its forecast for Africa's most advanced economy from the 1.3 percent growth forecast in 2015, saying domestic issues compounded global challenges faced by most emerging markets.
The forecast brought the Bank in line with the International Monetary Fund, which in December halved its 2016 growth forecast for South Africa to 0.7 percent. The bank sees growth at 1.1 percent in 2017.
"In this prevailing weak economic climate, it is important for South Africa to look to other avenues outside the fiscal space to stimulate faster growth," said the World Bank country director for South Africa, Guang Zhe Chen.
Rising public debt and inflationary pressures had put forced South Africa's fiscal and monetary policy towards tightening foot, the body said in the report.
South Africa's central bank expects inflation to reach 7 percent by the end of 2016, outside an upper limit of 6 percent that it targets.
The report said government could ease high levels of unemployment and poverty by tightening competition policy and creating space for bold policy decisions.
By the expanded definition of unemployment, which includes people who have stopped looking for work, 34.4 percent of South Africans are out of work.
(Reporting by Mfuneko Toyana, editing by Larry King)