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IOL News
3 hours ago
- Business
- IOL News
IMF maintains stagnant growth projections for South Africa as structural reforms lag
The IMF said there is a need for broad structural and institutional reforms, further regional trade integration, more investment in infrastructure, transportation, and reform of State-Owned Enterprises, especially in the energy sector and transportation sector are the other priorities. Image: Leon Lestrade/ Independent Newspapers South African economists are voicing serious concerns as the International Monetary Fund (IMF) holds steady on its meagre growth forecasts for the country, projecting a mere 1% growth in 2025 and 1.3% in 2026. This cautious stance, reiterated in the latest World Economic Outlook (WEO) published on Tuesday, reflects the IMF's assessment that the nation has made insufficient progress in implementing crucial structural reforms, particularly in critical network industries such as logistics and energy. The latest estimates mirror the IMF's April predictions, which marked a notable 0.5 percentage point reduction due to sluggish activity among key trading partners and the mounting pressure of rising US tariffs. The forecasts contrast with those from the National Treasury, which anticipates a growth rate of 1.4% in 2025 and 1.6% in 2026, as well as the South African Reserve Bank's optimistic outlook of 1.2% growth for 2025 rising to 1.8% by 2027. These discrepancies highlight a deeply concerning divergence between South Africa's economic trajectory and that of its neighbours in sub-Saharan Africa. Momentum Investments chief economist, Sanisha Packirisamy, emphasised that South Africa was grappling with chronic structural constraints that severely limit its growth potential. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading 'While regional peers are capitalizing on demographic advantages, commodity benefits, and reform-induced growth, South Africa continues to struggle with its own shortcomings,' she said. One of the primary hurdles identified is the inefficiency in electricity transmission and distribution, despite appreciable advancements in generation. Additionally, persistent bottlenecks in logistics—particularly regarding freight rail and port operations—remain significant obstacles to both output and investment. 'Reform is underway, but implementation has been sluggish, with only a muted growth impact in sight. With entrenched issues such as high unemployment, inequality, and a constrained fiscal landscape, domestic demand and policy flexibility are further restricted,' Packirisamy noted. Supporting this view, Investec chief economist Annabel Bishop said the IMF's forecast was in line with theirs at 0.9% for 2025 on the poor growth in the first quarter, and 1.5% for 2026 based on weakening global growth environment and insufficient progress at Transnet. Bishop said progress on improving Transnet's capacity, on both the rail and port sides to end the domestic freight crisis that weakens South Africa's growth rate, continued to be too slow. 'Critical challenges faced by Transnet … that have macro-economic implications, have led to muted economic growth for the country, including unreliable supply of electricity, increased crime and rail underinvestment,' Bishop said. 'South Africa's growth this year is expected above 2024's weak 0.6%, but much depends Transnet's capacity to lift its freight delivery substantially further for economic growth to near 3.0%, which still only likely by the end of this decade.' In stark contrast to South Africa's stagnant predictions, the IMF has optimistically revised its growth forecast for the Sub-Saharan Africa region to a robust 4% for 2025, up from an earlier estimate of 3.8%. Following that, the forecast for 2026 rises further to 4.3%, indicating a more favourable economic climate for several nations within the region. Deniz Igan, chief of the IMF Research Department's World Economic Studies Division, said they were seeing continued subdued growth for Sub-Saharan said external conditions, particularly for Sub-Saharan Africa, remained quite challenging. 'We talked about financial conditions, whether there would be a reset due to higher interest rates globally and tightening of global financial conditions, especially for high-debt countries, that would be a risk. But also, there are domestic risks for Sub-Saharan African economies, regional conflicts, social unrest and climate change are perhaps a few to mention,' Igan said. 'Given the challenges Sub-Saharan Africa is facing, [structural reforms] is an important pillar for renewed growth in the region. There is a need for broad structural and institutional reforms, further regional trade integration, more investment in infrastructure, transportation, and reform of State-Owned Enterprises, especially in the energy sector and transportation sector are the other priorities.' BUSINESS REPORT
Epoch Times
3 hours ago
- Business
- Epoch Times
IMF Lifts US Growth Forecasts on Lower Tariffs, Boost From One Big Beautiful Bill Act
The International Monetary Fund (IMF) has raised its U.S. economic growth outlook, citing easing trade frictions and fiscal stimulus from the One Big Beautiful Bill Act, even as the global agency warned that tariff risks and inflation pressures remain. The IMF said in its latest World Economic Outlook (WEO) report, released on July 29, that it now expects the U.S. economy to expand by 1.9 percent in 2025 and by 2 percent in 2026. That's up 0.1 and 0.3 percentage points, respectively, from the IMF's projections in April, when it expected higher tariffs and tighter financial conditions than have since materialized.
Time of India
6 hours ago
- Business
- Time of India
India world's fastest-growing major economy: IMF upgrades 2025 & 2026 growth forecast to 6.4%; global growth lifted to 3.1% in 2026
The International Monetary Fund (IMF) has revised its forecast for India's economic growth to 6.4% for both 2025 and 2026 — up from 6.2% and 6.3%, respectively, projected in its April 2025 World Economic Outlook — reaffirming India's position as the world's fastest-growing major economy. Tired of too many ads? go ad free now The IMF also modestly raised its global growth outlook to 3.0% in 2025 and 3.1% in 2026, citing lower-than-expected impact from tariffs, a weaker US dollar, and improved financial conditions. The updated World Economic Outlook (WEO), released Tuesday, noted that 'growth in India is projected to be 6.4 percent in 2025 and 2026, with both numbers revised slightly upward, reflecting a more benign external environment than assumed in the April reference forecast.' In comparison, China is forecast to grow at 4.8% in 2025 and 4.2% in 2026, while the US is expected to expand 1.9% in 2025 and 2.0% in 2026, with a temporary boost from the One Big Beautiful Bill Act fiscal package. While global growth remains below the pre-pandemic average of 3.7%, the IMF attributes the upward revision to 'stronger-than-expected front-loading in anticipation of higher tariffs; lower average effective US tariff rates than announced in April; an improvement in financial conditions, including due to a weaker US dollar; and fiscal expansion in some major jurisdictions.' The agency warned, however, that risks are still tilted to the downside. 'A rebound in effective tariff rates could lead to weaker growth... Elevated uncertainty could start weighing more heavily on activity, also as deadlines for additional tariffs expire without progress on substantial, permanent agreements,' it said. On inflation, the IMF expects global headline inflation to fall to 4.2% in 2025 and 3.6% in 2026, with sharp variations across countries. Tired of too many ads? go ad free now 'Inflation will remain above target in the United States and be more subdued in other large economies,' the report said. The report added that 'global trade volume is revised upward by 0.9 percentage point for 2025 and downward by 0.6 percentage point for 2026', indicating that recent gains from tariff front-loading may taper off. Among large emerging economies, India, China and Indonesia remain standout performers, with the IMF crediting India's gains partly to external stability. For India, projections are based on the calendar year, with the agency noting that 'India's growth projections are 6.7 percent for 2025 and 6.4 percent for 2026 based on fiscal year data.' On the upside, the IMF said the global economy could gain further if 'trade negotiations lead to a predictable framework and to a decline in tariffs. Policies need to bring confidence, predictability, and sustainability by calming tensions, preserving price and financial stability, restoring fiscal buffers, and implementing much-needed structural reforms.'
Business Recorder
7 hours ago
- Business
- Business Recorder
IMF projects Pakistan's GDP growth at 3.6% for FY26, below govt target of 4.2%
ISLAMABAD: The International Monetary Fund (IMF) has projected gross domestic product (GDP) growth rate for Pakistan at 3.6% for the current fiscal year 2025-26 against the government target of 4.2%. The fund in its latest report, 'World Economic Outlook Update, Global Economy: Tenuous Resilience amid Persistent Uncertainty', upgraded GDP growth estimates for the last fiscal year 2024-25 by 0.1% to 2.7%. Finance Division in its monthly economic outlook for June 2025 claimed that real GDP grew by 2.68% in the fiscal year 2024-25. Finance ministry projects July inflation at 3.5-4.5% as price pressures ease The World Bank has projected GDP growth rate for Pakistan at 3.1% for the fiscal year 2026 and the Asian Development Bank (ADB) at 3% for FY26. In its latest report, ADB revised Pakistan's GDP growth estimate for fiscal year 2025 slightly upward to 2.7% from its earlier projection of 2.5%. IMF stated that global growth is projected at 3% for 2025 and 3.1% in 2026. The forecast for 2025 is 0.2 percentage point higher than the reference forecast of the April 2025 WEO and 0.1 percentage point higher for 2026. 'This reflects stronger-than-expected front-loading in anticipation of higher tariffs; lower average effective US tariff rates than announced in April; an improvement in financial conditions, including due to a weaker US dollar; and fiscal expansion in some major jurisdictions,' it added. The report further stated that global headline inflation is expected to fall to 4.2% in 2025 and 3.6% in 2026, a path similar to the one projected in April. The overall picture hides notable cross-country differences, with forecasts predicting inflation will remain above target in the United States and be more subdued in other large economies. Risks to the outlook are tilted to the downside, as they were in the April 2025 World Economic Outlook.
Al-Ahram Weekly
8 hours ago
- Business
- Al-Ahram Weekly
IMF slightly trims Egypt's growth forecast amid global trade shifts - Economy
The International Monetary Fund (IMF) has slightly lowered its projection for Egypt's real GDP growth by 0.2 percent for the current FY2025/2026, which began on 1 July. The revised forecast now stands at 4.1 percent, down from its April estimate of 4.3 percent. The report, an updated version of the World Economic Outlook (WEO) released on Tuesday, did not elaborate on the specific reasons behind this revision. The IMF said in July that it will combine the fifth and sixth reviews of Egypt's ongoing $8 billion loan programme, with both slated for completion in December. The fifth review was primarily scheduled to be completed in June, yet the implications for the regional geopolitical tensions impeded that. At the regional level, the IMF projects that the Middle East and Central Asia will experience an uptick in growth, reaching 3.4 percent in 2025 and 3.5 percent in 2026, reflecting a broader stabilisation following recent economic pressures. Global growth slows, but revisions improve 2025 outlook On a global scale, the Fund anticipates modest deceleration in economic growth over the coming years, forecasting three percent growth in 2025 and 3.1 percent in 2026. These figures fall below both the 2024 estimate of 3.3 percent and the pre-pandemic average of 3.7 percent, indicating a shift back to slower long-term trend growth. Despite the overall slowdown, the IMF upgraded its 2025 global growth forecast from the April outlook, driven by stronger-than-expected international trade, a lower effective global tariff rate, and improved global financial conditions. Countries, including China, saw some of the most notable upward revisions. Trade activity boosts short-term forecasts, but raises 2026 risks The report highlights a short-term boost from front-loading of trade flows amid elevated policy uncertainty and expectations of trade restrictions. As a result, global trade volume for 2025 was revised upward by 0.9 percent. However, the report expected this offset to fade in the second half of 2025, with a projected 'payback' effect in 2026, leading to a 0.6 percent downward revision in global trade for that year. According to the WEO, the weaker US dollar is magnifying the impact of tariffs on the country's trade balances rather than offsetting it. While tariffs are positively affecting the US current account, their impact is being more than neutralised by the government's expansionary fiscal stance. Medium-term outlooks suggest that fiscal stimulus in current account surplus economies may help reduce global imbalances. Disinflation Trend continues globally Global inflation continues on a downward trajectory, with headline inflation projected to fall to 4.2 percent in 2025 and 3.6 percent in 2026, broadly unchanged from the April WEO. This is attributed to cooling demand and lower energy prices, although regional variations persist. In the US, tariffs are acting as a supply-side shock, gradually feeding into consumer prices and pushing inflation above the Federal Reserve's two percent target through 2026. Meanwhile, inflation in the euro area is expected to ease due to currency appreciation and one-off fiscal policies. In China, core inflation was revised slightly upward, reflecting higher-than-expected recent readings. Downside risks still overshadow outlook The report asserted that downside risks continue to dominate. The fragile trade policy balance could be disrupted by escalating protectionism. If the tariff levels proposed by the US administration, including up to 50 percent on copper, are implemented, global growth could decline by around 0.2 percent in 2025. Additional sectoral tariffs, particularly in electronics and pharmaceuticals, and nontariff barriers targeting key inputs may result in supply chain disruptions and heightened inflationary pressures. Even without new measures, trade policy uncertainty could discourage investment, especially in export-driven economies. Moreover, rising geopolitical tensions, particularly in the Middle East and Ukraine, pose further threats by potentially introducing supply shocks, disrupting shipping routes, and driving up commodity prices. This scenario would likely weigh on growth and rekindle inflation, placing central banks in more difficult policy positions. As per the report, fiscal vulnerabilities are also a concern. Countries like Brazil, France, and the US are running large fiscal deficits alongside historically high public debt, potentially tightening global financial conditions and increasing market volatility, especially if concerns about Us fiscal sustainability and the dollar's role in the global monetary system escalate. Moreover, the front-loading of trade earlier this year may leave firms exposed to shocks. Inventory overhangs could reduce import demand and result in higher holding costs or losses if expected demand fails to materialise. Structural reforms, trade deals offer brighter long-term path On a more positive note, the IMF notes that a breakthrough in trade negotiations could help reduce tariffs, lower uncertainty, and foster investment. If these agreements extend to digital services and foreign investment, they could yield long-term gains in productivity and resilience. Additionally, such progress could encourage structural reforms in areas such as labour markets, business regulation, and competition, setting the stage for more sustainable medium-term growth in a challenging global environment. Follow us on: Facebook Instagram Whatsapp Short link:
