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WORLD ECONOMIC OUTLOOK

IMF says ‘hard landing has receded’, raises 2024 global growth forecast

IMF says ‘hard landing has receded’, raises 2024 global growth forecast
Chief economist of the IMF Pierre-Olivier Gourinchas. (Photo: EPA-EFE / Michael Reynolds)

The International Monetary Fund has slightly raised its global economic growth forecast for 2024. It has also slashed its growth forecast for South Africa, which is far more credible than some of its recent predictions.

The International Monetary Fund (IMF)  said on Tuesday that the global economic outlook was slowly brightening.

“With disinflation and steady growth, the likelihood of a hard landing has receded,” the IMF said in its latest World Economic Outlook, which was launched in Johannesburg. 

“Global growth is projected at 3.1% in 2024 and 3.2% in 2025, with the 2024 forecast 0.2 percentage point higher than that in the October 2023 World Economic Outlook on account of greater-than-expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China.” 

This slight upward revision to the IMF forecast for this year means that growth in 2024 is seen to remain unchanged from the 3.1% estimate for 2023. This differs from the Washington-based lender’s sibling, the World Bank, which projects decelerating growth this year. 

Recession fears recede

The IMF’s forecasts over the past 15 months have become increasingly brighter, and the dreaded “R” word is receding from view. 

“We’re very far from a global recession scenario,” IMF chief economist Pierre-Olivier Gourinchas told the briefing. 

But the overall pace of growth remains relatively sluggish.

“The forecast for 2024/25 is… below the historical (2000-2019) average of 3.8%, with elevated central bank policy rates to fight inflation, a withdrawal of fiscal support amid high debt weighing on economic activity, and low underlying productivity growth,” the IMF said. 

And while there has “been greater-than-expected resilience” in large emerging market economies, South Africa is hardly one of them.

The IMF slashed its South African growth forecast for this year to 1.0% from 1.8% previously, largely because of the logistics meltdown at the ports and railways. That may seem on the low side to some, but is more credible than some of its recent perplexingly rosy outlooks for South Africa.

Read more in Daily Maverick: IMF raises 2023 GDP world growth forecast – even, perplexingly, for South Africa 

The downward revision underscores how South Africa’s Big Three state failures – power, crime and logistics – shackle the economy’s ability to grow and erode outside perceptions of the country as an investment destination. 

This in turn undermines the fight against the other terrible trifecta – poverty, unemployment and inequality. 

The one silver lining here is that the global economy seems to have dodged a recession, broadly defined as two straight quarters of contracting output. This would have knocked South Africa into a potentially prolonged downturn. 

And who knows, the IMF may have underestimated South African economic growth for this year. But as things stand now, it doesn’t look like it will do much better than the 1% pegged by the Fund. DM

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