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IMF cuts South Africa growth forecasts

IMF cuts South Africa growth forecasts
Written by publisher team

The International Monetary Fund has lowered its 2022 growth forecast for South Africa on the back of a lower-than-expected second half of 2021 and weaker investment outlook, as business sentiment remains weak.

In its global outlook report released on Tuesday (January 26), the World Monetary Group said it now expects South Africa’s economy to grow by 1.9% in 2022. This is lower than the October forecast of 2.2%.

The International Monetary Fund expects growth to slow further to 1.4% in 2023. On a more positive note, the group estimates that South Africa’s GDP grew by 4.6% in the recovery from the Covid-19 pandemic and the 2020 lockdown losses.

The combined pressure of tight Covid-19 lockdown restrictions and a string of civil unrest in July caused the economy to contract in the third quarter of 2021, Statistics South Africa said on December 7.

After posting four consecutive quarters of positive growth, real GDP fell by 1.5%, eroding some of the country’s economic gains since the severe impact of Covid-19 in the second quarter of 2020. Statistics South Africa is expected to publish its results for the fourth quarter and full-year GDP on March 8, 2022.

The lower-than-expected growth is in line with reviews from other countries, as the global economy enters 2022 in a weaker position than previously expected.

“With the spread of the new Omicron Covid-19 variant, countries have re-imposed restrictions on mobility. Rising energy prices and supply disruptions have led to higher and broader inflation than expected, particularly in the United States and many emerging market and developing economies,” the IMF said.

“The ongoing downsizing of China’s real estate sector and the slower-than-expected recovery of private consumption also have limited growth prospects.”

The International Monetary Fund said global growth is expected to slow from 5.9% in 2021 to 4.4% in 2022 — half a percentage point lower for 2022 than in its October World Economic Outlook (WEO), largely reflecting projected cuts in the two largest economies.

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