The International Monetary Fund has revised South Africa’s growth forecast for 2021 down from 6% to 4%. In its World Economic Outlook report, the IMF says while there’s been marginal growth in developed economies, their gains have been offset by developing and emerging markets whose prospects are marked down for 2021.
The IMF projects global economic growth of 6% in 2021 and 4.9% in 2022. IMF Chief Economist Gita Gopinath says although the global recovery is under way, a widening gap between developed and developing economies has become apparent.
“These revisions to a certain extent differences in pandemic developments as the Delta variant takes over. Now close to 40% of the population in advanced economies has been fully vaccinated compared with 11% in emerging market economies and a tiny fraction in low income countries. Faster than expected vaccinations rates and return to normalcy have left upgrades, while renewed waves of COVID-19 cases in some countries notably India, have led to down grades,” says Gopinath.
She says the proposed $650 billion of Special Drawing Rights at the IMF is set to boost reserve assets of all economies and help ease cash constraints.
“We have the IMF proposal to make an SDR allocation of $650 billion of general allocation of SDR that we hope will be allocated relatively soon, sometime in August and that’s very important to go through because we know that that will help countries build up their reserves, build up the buffers, provide them the liquidity that they will need to deal with these incredibly challenging times,” says the IMF Chief Economist.
The IMF expects inflation to return to pre-pandemic ranges in most countries by 2022 as pandemic-induced disruptions work their way through prices.
South Africa’s GDP grows by 1.1% in Q1