The International Monetary Forum (IMF) has revised global growth downwards by half a percent since its previous forecast in October last year.
The IMF expects global growth to moderate from 5.9% in 2021 to 4.4% in 2022.
This is mainly due to downgrades of the US and Chinese economies.
Other factors to the downward revision include the global spread of the Omicron variant and supply chain disruptions.
The IMF has upheld its previous outlook of South Africa with the local economy expected to grow to 4.6 in 2021, but that figure has been revised to 1.9% in 2022.
In December last year, the IMF said the South Africa government needs to make efforts towards increasing labour market flexibility, reduce the existing regulatory barriers to private investment, and ensure energy security among other recommendations.
IMF Deputy Managing Director, Gita Gopinath says the rapid spread of the Omicron variant has led to renewed mobility restrictions in many countries and increased labour shortages.
Gopinath says, “All of these challenges that we’re facing many of them, not all of them, but many of challenges that the world is facing is because we still remain in the grip of the pandemic. Most recent, the Omicron variant, the disruptions it’s causing in the first quarter of this year is just a sign that we’re not going to escape the pandemic durably without wide spread vaccination, testing, diagnostics everywhere in the world.”
She says elevated inflation is expected to persist for longer than the IMF had anticipated in its October outlook.
Gopinath says as advanced economies lift policy rates, the capital flows, currencies, and fiscal positions of emerging markets and developing economies will be at risk.
“With interest rates rising, low income countries of which 60% are already in or at high risk of debt distress will find it increasingly difficult to service their debt. The G20 commons framework needs to be rebound to deliver more quickly on debt restructuring and G20 creditors and private creditors to suspend debt service while the restructuring is being negotiated.”
The IMF expects that the COVID-19 pandemic will cost the global economy $ 13.8 trillion by 2024.
VIDEO: In October 2021, the International Monetary Fund forecasted that SA’s economic virtues were expected to turn for the better:
