IMF cuts forecast for South African growth

January 26, 2022

The International Monetary Fund has lowered its forecast for economic growth in South Africa this year.

It now expects growth of 1.9% in 2022, a downgrade from its previous forecast of 2.2%.

"South Africa’s growth forecast is downgraded in light of a softer-than-expected second half in 2021 and a weaker outlook for investment as business sentiment remains subdued," the IMF said in a statement.

Its growth forecast for 2022 is still above that of the SA Reserve Bank, which expects growth of only 1.7% this year.

But the IMF expects even weaker growth in 2023, of 1.4%.

For the whole of 2021, the IMF expects that the local economy would have grown by 4.6%. Data for the final quarter has not yet been released.

The IMF also lowered its forecast for global growth to 4.4% in 2022 - half a percentage point weaker than its previous forecast - from an estimated 5.9% in 2021. 

"The global economy enters 2022 in a weaker position than previously expected," it said.

This is due to new restrictions and lockdowns amid the Omicron Covid-19 variant, as well as higher energy prices and supply disruptions. This has pushed inflation higher than expected in the US and elsewhere. 

"The ongoing retrenchment of China’s real estate sector and slower-than-expected recovery of private consumption also have limited growth prospects." 

Global growth is expected to slow to 3.8% in 2023. 

"Risks to the global baseline are tilted to the downside," said the IMF. "The emergence of new Covid-19 variants could prolong the pandemic and induce renewed economic disruptions. Moreover, supply chain disruptions, energy price volatility, and localised wage pressures mean uncertainty around inflation and policy paths is high."-fin24

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Last modified on Wednesday, 26 January 2022 16:28

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