IMF revises SA’s prospects of growth for 2021 upwards
JOHANNESBURG - THE INTERNATIONAL Monetary Fund (IMF) has revised South Africa's growth prospects for 2021 upwards due to a stronger-than-expected global economic rebound of 6 percent.
The IMF yesterday said South Africa's gross domestic product (GDP) would now grow at 3.1 percent this year, up from a revised 2.8 percent forecast in January due to vaccines concerns.
For 2022, the IMF in its World Economic Outlook said South Africa's economy would advance by 2 percent, up from the previous estimate of 1.4 percent before moderating at 1.6 percent in 2026.
The IMF's outlook is slightly lower than the SA Reserve Bank and the National Treasury estimates, which expect the economy to rebound by 3.3 percent and 3.8 percent this year, respectively.
The lender of last resort also said inflation pressure would remain contained in most countries, including South Africa, where inflation has remained at record lows since the pandemic.
“South Africa's monetary policy assumptions are with maintaining inflation within the 3-to-6 percent target band,” it said.
The IMF's World Economic Outlook reflected higher-than-expected growth out-turns in the second half of the year for most regions after lockdowns were eased and as economies adapted to new ways of working.
In Sub-Saharan Africa, the IMF said growth was expected to rebound to 3.4 percent in 2021, significantly lower than the trend anticipated before the pandemic following the largest contraction ever for the region.
It said tourism-reliant economies would likely be the most affected as international travel was still restricted in some parts of the world.
Nonetheless, the IMF said the world economy would grow by 6 percent this year compared to a 5.2 percent expansion projected in October and 4.4 percent in 2022 after an estimated historic contraction of -3.3 percent in 2020.
The IMF said that the 2021 outlook depended on the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions.
IMF's chief economist Gita Gopinath said these upgrades in global growth for 2021 and 2022 were mainly due to upgrades for advanced economies, particularly to a sizeable upgrade for the US.
The US economy is expected to grow at 6.4 percent this year.
“This makes the US the only large economy projected to surpass the level of GDP it was forecast to have in 2022 in the absence of this pandemic,” Gopinath said.
“Other advanced economies, including the euro area, will also rebound this year, but at a slower pace. Among emerging markets and developing economies, China is projected to grow this year at 8.4 percent.
“While China's economy had already returned to pre-pandemic GDP in 2020, many other countries are not expected to do so until 2023.”