THE International Monetary Fund (IMF) has revised its growth forecast for South Africa next year significantly upwards, predicting the economy will expand by 4.1%, up from an estimated 2.8% this year.
The forecast in the IMF’s latest World Economic Outlook surpasses the 3.8% predicted in its previous October report and is well above both market consensus and official estimates.
The Treasury sees the economy expanding by 3.8% next year, while the Reserve Bank expects growth of 3.6%. Consensus forecasts compiled by Reuters predict the economy will grow by 3.5% next year.
There were no reasons given for the IMF’s updated estimate for South Africa.
Global growth will strengthen gradually this year, but the recovery will be a bit slower than anticipated in October, the lending body said.
"Policy actions have lowered acute crisis risks in the euro area and the US. At the same time, policies have supported a modest growth pickup in some emerging market economies," the IMF said in its report.
"If crisis risks do not materialise and financial conditions continue to improve, global growth could be stronger than projected. But downside risks remain significant, including prolonged stagnation in the euro area and excessive short-term fiscal tightening in the US."
Growth in global economic output was set to quicken to 3.5% this year from 3.2% last year, and accelerate to 4.1% next year, the IMF said.
But it revised its outlook for activity in the euro area downwards, predicting that it would contract by 0.2% this year, compared with an October forecast for growth of 0.2%.
Next year, the IMF sees output from the euro area, which is one of South Africa’s main trade partners, expanding by 1%.
Even though policy actions have reduced the risks and improved financial conditions for governments and banks in the periphery euro economies, this had not yet translated into improved borrowing conditions for the private sector, the IMF said.
"Continuing uncertainty about the ultimate resolution of the global financial crisis, despite continued progress in policy reforms, could also dampen the region’s prospects," it added.
Growth in the US was set to slow to 2% this year from 2.3% last year, and then accelerate to 3% next year — broadly unchanged from October estimates, the IMF’s forecasts showed.
"In particular, a supportive financial market environment and the turnaround in the housing market have helped to improve household balance sheets and should underpin firmer consumption growth in 2013," the IMF said.
Growth in emerging market and developing economies was set to build up to 5.5% this year from 5.1% last year, before quickening to 5.9% next year, the IMF said.
"But weakness in advanced economies will weigh on external demand, as well as on the terms of trade of commodity exporters, given the assumption of lower commodity prices in 2013," the IMF said.
Emerging economies had to rebuild policy room for manoeuvre but "the appropriate pace of rebuilding must balance external downside risks against risks of rising domestic imbalances," it added.
The IMF left its forecasts for China unchanged, saying growth was expected to pick up to 8.2% this year from 7.8% last year and accelerate to 8.5% next year.
Its near-term growth outlook for Japan was left unchanged at 1.2% this year but was revised down to 0.7% next year, from 1.1% in October.