The International Monetary Fund (IMF) has maintained South Africa’s 2024 growth forecast below 1% but revised downwards its forecast for sub-Saharan Africa due to weaker-than-expected activity in the first quarter.
In its World Economic Outlook, published this week, the IMF stated that South Africa’s gross domestic product (GDP) is projected to grow by 0.9% this year despite improvements in the logistics sector, electricity supply, and the suspension of load shedding.
This forecast remains unchanged from the IMF’s April prediction, made while the country was still experiencing rotational power cuts, though less frequently than in 2023.
Looking ahead to 2025, the IMF predicts South Africa’s GDP growth will stay at 1.2%, consistent with its April forecast.
Meanwhile, the IMF has revised down its growth forecast for sub-Saharan Africa, largely due to a 0.2 percentage point reduction in Nigeria's growth outlook amid weaker-than-expected activity in the first quarter.
Globally, the IMF’s growth projections remain steady at 3.2% for this year, with a slight increase to 3.3% for next year, though notable developments have emerged since the April outlook.
“Growth in major advanced economies is becoming more aligned as output gaps are closing. The United States shows increasing signs of cooling, especially in the labour market after a strong 2023. The euro area, meanwhile, is poised to pick up after a nearly flat performance last year,” said the IMF’s chief economist Pierre-Olivier Gourinchas.
“Asia’s emerging market economies remain the main engine for the global economy. Growth in India and China is revised upwards and accounts for almost half of global growth."
As in April, the IMF projects global inflation to slow to 5.9% this year from 6.7% last year, indicating a trend toward a soft landing.
However, in some advanced economies, particularly the US, the IMF noted that progress on disinflation has slowed, with risks skewed to the upside.
“In our latest World Economic Outlook update, we find that risks remain broadly balanced but two downside near-term risks have become more prominent,” Gourinchas said.
“First, further challenges to disinflation in advanced economies could force central banks including the Federal Reserve to keep borrowing costs higher for even longer. That would put overall growth at risk, with increased upwards pressure on the dollar and harmful spillovers to emerging and developing economies.
“Mounting empirical evidence including some of our own points to the importance of global ‘headline’ inflation shocks – mostly energy and food prices – in driving the inflation surge and subsequent decline across a broad range of countries.
“The good news is that as headline shocks receded, inflation came down without a recession. The bad news is that energy and food price inflation are now almost back to pre-pandemic-levels in many countries, while overall inflation is not,” he said.
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