IMF cuts SA growth outlook as Middle East war fuels global risks

International financial institution downgrades country’s forecasts on the weight of Middle East conflict

- SIPHELELE DLUDLA

IMF chief economist Pierre-Olivier Gourinchas said they were seeing broad downgrade of growth and an uptick in inflation in a number of countries in the region.

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THE International Monetary Fund (IMF) has sharply downgraded South Africa’s economic growth forecasts for 2026 and 2027, warning that escalating conflict in the Middle East and resulting energy shocks are weighing on global and regional prospects.

In its April edition of the World Economic Outlook, the IMF revised South Africa's growth projection for 2026 down to 1.0%, down from the 1.4% forecast in January. The outlook for 2027 was also lowered to 1.3%, compared with the previous estimate of 1.5%.

The downward revisions reflect mounting global uncertainty following the outbreak of war in the Middle East in late February, which has disrupted energy markets, driven up oil prices, and heightened inflationary pressures worldwide.

The war is a blow for South Africa's economy, which is forecast by the National Treasury and the SA Reserve Bank to move somewhat higher, approaching 2% over the medium term.