The IMF has upgraded its growth forecasts for SA, lifting these to 1.1% for this year and 1.5% for next year in its latest World Economic Outlook.
But it has kept its global growth projections unchanged and warned that rising geopolitical and trade tensions could cut global output by as much as 0.5% in the next couple of years.
The new SA forecasts, the first update by the fund since the formation of the government of national unity, are an increase on its July forecasts of 0.2 percentage points for 2024 and 0.3 percentage points for 2025. At this level they are similar to the most recent Reserve Bank and consensus forecasts, though some economists are more optimistic about next year.
In the outlook, launched on Tuesday at the start of its annual meetings in Washington DC, the IMF reduced its Sub-Saharan Africa forecast slightly for this year to 3.6%, citing the impact of conflict in South Sudan and slower-than-expected growth in Nigeria.
But it raised it slightly to 4.2% for next year, with the adverse impacts of weather shocks in the region expected to abate and supply constraints to ease gradually.
The fund will launch its new Sub-Saharan Africa outlook on Friday, providing more detail on the region and on SA.
IMF economist Jean-Marc Natal said on Tuesday that inflation in Sub-Saharan Africa had stabilised, though half of the countries in the region were still a large distance from their inflation targets and a third still had double-digit inflation. Growth was uneven but remained too low and debt in the region was still high.
Geopolitical tensions, low global growth and high global debt levels are three key concerns the fund is flagging at the annual meetings, which attract the world’s central bankers, finance ministers and leading private sector bankers and financiers each year.
IMF chief economist Pierre-Olivier Gourinchas said the fund was very concerned about geopolitical tensions, which in a scenario of increased trade disruption and trade tariffs could account for 0.5% of global output.
This is on top of other tensions affecting commodity markets and shipping that the IMF has estimated could reduce global growth by 0.4% by 2026 and increase global inflation by 0.7% in 2025.
“We are living in a world in which there are multiple layers of risk,” Gourinchas told journalists.
“We’ve seen a very strong increase in the number of trade-distorting measures implemented by countries since 2019, from 1,000 to 3,000 ... there is definitely a direction of travel which we view with concern because a lot of trade-distorting measures could be ultimately harmful not just to the global economy but also hurtful for countries that implement them as well,” he said.
The IMF was careful not to comment on the looming US presidential election and its possible effect on global trade and the global economy.
But Gourinchas said the US economy news was very good, with the IMF upgrading its growth forecast and the risk of recession diminished.
The US has made progress with disinflation and is benefiting from strong productivity growth — unlike other advanced economies — as well as from the significant role that immigration has played, with an increase in foreign-born workers who have been integrated fairly quickly into the labour force.
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