Business Maverick

WORLD ECONOMIC OUTLOOK

IMF revises its 2023 global economic growth forecast slightly upwards, including for SA

IMF revises its 2023 global economic growth forecast slightly upwards, including for SA
The International Monetary Fund (IMF) headquarters during the spring meetings of the IMF and World Bank Group in Washington, DC, US, on 13 April 2023. (Photo: Samuel Corum / Bloomberg via Getty Images)

The International Monetary Fund (IMF) on Tuesday slightly raised its 2023 forecast for global economic growth to 3.0% from 2.8%. It also raised its prediction for South African gross domestic product (GDP) growth to 0.3% from 0.1%. South Africa remains a laggard, but a faster global economic expansion may bode well for some domestic industries.

What a difference a few months makes.

In October last year, the IMF cut its global economic growth forecast to 2.7% from 2.9% and warned of looming recessions. A few weeks later, it said that things were looking even “gloomier”.

Read more in Daily Maverick: International Monetary Fund’s global growth forecast worsens from ‘gloomy’ to ‘gloomier’

By April, the prospects of a global recession were fast diminishing and the IMF was seeing growth at a slightly perkier 2.8% for 2023, which was still slower than what was obtained in 2022. 

Now, in its July World Economic Outlook (WEO), things look less gloomy. But over the march of recent history, global growth is still pretty pedestrian. 

“Global growth is projected to fall from an estimated 3.5% in 2022 to 3% in both 2023 and 2024. While the forecast for 2023 is modestly higher than predicted in the April 2023 WEO, it remains weak by historical standards,” the IMF said. 

It said the factors still constraining growth include the worldwide rise in interest rates to contain inflation and “the balance of risks to global growth remains tilted to the downside”.

“Inflation could remain high and even rise if further shocks occur, including those from an intensification of the war in Ukraine and extreme weather-related events, triggering more restrictive monetary policy.

“Financial sector turbulence could resume as markets adjust to further policy tightening by central banks. China’s recovery could slow, in part as a result of unresolved real estate problems,” the IMF said. 

At least for now, its growth projections – including for South Africa – are creeping up rather than down. 

The IMF’s forecast for South African growth for 2023 edged up to 0.3% from 0.1% previously, in line with the central bank’s modelling. This is no doubt partly related to the reduction in rotational blackouts in June, which underscores the impact that the power crisis has on the economy. 

It’s also true that slightly brisker global growth should provide a little more breeze for the sails of the South African economy. Such a scenario may underpin demand for key South African commodities such as platinum group metals, iron ore and coal, boosting their price. 

It should also help lift demand for manufactured South African products such as vehicles.  

Overall, South Africa’s growth prospects still look pretty dire. 

The 2023 forecast for emerging markets and developing economies as a group – which obviously includes South Africa – is GDP growth of 4%. South Africa’s rate this year is not even expected to be one-tenth of that.

But as a small consolation, South Africa’s prospects don’t look as dire as they did a few months ago. And any green shoot is welcome in an arid environment. DM

Gallery

Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options

Daily Maverick Elections Toolbox

Feeling powerless in politics?

Equip yourself with the tools you need for an informed decision this election. Get the Elections Toolbox with shareable party manifesto guide.