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
