IMF boosts SA's growth forecast
Growth of 1.1% expected
Global growth is expected to be "stable yet underwhelming".
The International Monetary Fund now expects South Africa to grow a bit faster this year and in 2025.As part of the IMF’s World Economic Outlook, which was released on Tuesday, South Africa's expected growth rate has been boosted from 0.9% to 1.1% this year. For the final quarter of 2024, it's now expecting 1.7% - from 1.3% previously.
The IMF's outlook for 2025 is also rosier: from 1.2%, it’s now expecting 1.5%.
As recently as last year, the IMF was still expecting the South African economy to grow by 1.8% in 2024. But at the start of the year, it slashed its forecast as it sounded the alarm on the impact of a dysfunctional Transnet, among other factors. Since then, South Africa’s economic outlook has improved as load shedding was halted, optimism about the new business-friendly government of national unity grew, and interest rates were lowered for the first time in years.
Last month, the IMF advised South Africa:
Monetary policy should stay data dependent and rate cuts be considered only after inflation declines sustainably toward the midpoint of the target range.
In its assessment of global growth in 2024, the IMF said it was expected to remain "stable yet underwhelming".
Inflation is expected to cool further, from 6.7% in 2023 to 5.8% in 2024 and 4.3% in 2025.
Further outlooks
However, the IMF warned about the impact of trade protectionism, regional conflicts and disruptions to supply chains, saying that the world should brace itself for uncertain times.
While it hiked its growth forecast for the US to 2.8%, it downgraded its expectations for Germany (which is forecast to flatline this year) and other European economies. The IMF expects growth of 3% in Brazil and downgraded its forecast for China slightly to 4.8%.
"Conditions for the [Chinese] real estate market could worsen, with further price corrections taking place amid a contraction in sales and investment," the fund said.
"This could cause domestic demand to falter, with negative spillovers to both advanced and emerging market economies given China's rising footprint in global trade," it added.
"Persistent structural headwinds—such as population aging and weak productivity—are holding back potential growth in many economies," the IMF said in its report.
The IMF revised its outlook for sub-Saharan Africa slightly lower due in part to disruptions to production and shipping of commodities — especially oil — conflicts, civil unrest, and extreme weather events. Still, the region is expected to grow by 3.6% this year and 4.2% in 2025. Strong growth is expected from Kenya (5%), Senegal (6%) and the Ivory Coast (6.2%) in particular this year.