JOHANNESBURG - The International Monetary Fund (IMF) has slashed South Africa’s economic growth forecast due to the impact of continuing lockdown restrictions and the slow pace of acquiring Covid-19 vaccines.
In its January updated World Economic Outlook yesterday, the IMF said South Afrca’s gross domestic product (GDP) will grow by 2.8 percent this year compared to the 3 percent forecast last year.
The lender of last resort also said South Africa1’s GDP will only grow by 1.4 percent in 2022.
South Africa is currently on an extended Level 3 lockdown which restricts the sale of alcohol while the 9pm to 5am curfew has halted various industries from operating extended hours.
The IMF said growth could turn out weaker than in the baseline if the virus surge proved difficult to contain, infections and deaths mount rapidly before vaccines were widely available.
It said slower-than-anticipated progress on medical interventions could dampen hopes of a relatively quick exit from the pandemic and weaken confidence.
“Specifically, vaccine rollout could suffer delays, widespread hesitancy could hamper vaccine take-up, vaccines could deliver shorter-lived immunity than anticipated, and advances on therapies could be limited,” it said.
The IMF’s growth forecast is below the SA Reserve Bank’s which last week forecasted that the GDP would grow by 3.6 percent in 2021, while rising by 2.4 percent in 2022
However, on the global front the IMF said the global economy was projected to grow 5.5 percent in 2021 and 4.2 percent in 2022 following a severe collapse of -3.5 percent in 2020.
The IMF said the strength of the recovery was projected to vary significantly across countries, depending on access to medical interventions and effectiveness of policy support.
The 2021 forecast was revised up 0.3 percentage point relative to the previous forecast, reflecting expectations of a vaccine-powered strengthening of activity later in the year.
The IMF, however, warned that renewed waves and new variants of the virus pose concerns for the outlook.
BUSINESS REPORT ONLINE