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