The International Monetary Fund (IMF) has projected that South Africa’s Gross Domestic Product (GDP) growth will be 0.9% for 2024.
The organisation said that in October 2023 SA’s GDP growth was projected to be 1.8% in 2024, then in January the fund said it had decreased to a mere 1%, now it has dropped to less than 1%.
In its latest world economic outlook, the IMF has also cut South Africa’s growth outlook for 2025. The organisation has reduced its 2025 growth projections by 0.1 percentage points to 1.2%.
Coupled with slow growth, the IMF said that SA will continue to fight high inflation and high unemployment in 2024.
The organisation said that South Africa’s consumer price inflation (CPI) will average 4.9% for 2024 and noted that this was higher than initial projections of 4.5%
Some hope as interest rates could come down
South Africans could see some relief as interest rates could come down by July.
This is according to Mpho Molopyane, the chief economist at Alexforbes.
In the 2023 Alexforbes Manager Watch Annual Survey, Molopyane said that South Africa inflation figures are slowly coming to the midpoint of the Reserve Bank’s 3% to 6% target range.
Molopyane said the 2024 economic outlook for SA has improved due to reduced load shedding and increased self-generation capacity.
The South African Reserve Bank (SARB) would possibly cut interest rates by the second half of the year, beginning in July. Alexforbes argued that the decline in inflation would allow the bank to cut the repo rate by 75 basis points (bps) by July 2024.
The SARB could also cut the interest rate by a further 50bps next year.
IMF outlook globally
The IMF said that the global economy continued to show great resilience, with growth holding steady and inflation declining, but many challenges still lie ahead.
According to Pierre‑Olivier Gourinchas, the director of research at the IMF, global GDP growth was projected at 3.2% in 2023 and is expected to remain at that level, both in 2024 and 2025.
“This represents a 0.3 percentage point upgrade from our October objections for 2024, with stronger activity than expected in the US, China, and other large emerging markets, but weaker activity in the Europe,” he said.
Gourinchas said that global inflation continues to come down and said that median inflation will decline from 4% at the end of last year to 2.8% by the end of this year and 2.4% at the end of 2025.
IOL BUSINESS