In the wake of global finance organisation the International Monetary Fund (IMF) cutting its GDP growth forecast for South Africa this year to 1% from 1.5%, and adding that it would reach a growth rate of only 1.8% by 2030, North-West University (NWU) Business School's Professor Raymond Parsons says South Africa needs a renewed emphasis on accelerating key structural reforms.

“A strategic pivot in growth policy is urgently required to create the extra economic buffers and resilience needed to decisively deal with external shocks and to ensure tailwinds outweigh headwinds in 2025,” he says.

The bad news from the IMF’s latest assessment of the impact of trade wars and policy uncertainty on the world economy is not unexpected, but nonetheless highlights the extent of the economic damage anticipated by recent unbridled US protectionism and its wider consequences, he notes.

In its updated ‘World Economic Outlook’ released on April 22, the IMF cut its projections for global output growth for this year to 2.8% down from its January forecast of 3.3%.

This would be the slowest expansion of GDP since the Covid-19 pandemic in 2020 and would also be the second-worst figure since 2009, news company Bloomberg reported.

However, the IMF has warned that its global growth forecast hides big variations across countries and is universally negative, Parsons highlights.

“While a global recession is unlikely, the IMF expects emerging markets and developed economies to experience much slower growth, including the two biggest ones, namely the US and China.

“The world economy is, therefore, now less supportive of domestic economic growth,” he emphasises.

However, the low growth forecast “is simply not good enough for South Africa, given its socioeconomic challenges. It falls far short of the Government of National Unity's target of wanting 3% inclusive growth in the medium term”.

High investment and job-rich growth therefore require confidence in the future. This is why there needs to be a renewed emphasis on accelerating key structural reforms, he says.

The IMF's forecasts for global growth, which have been markedly revised down, reflect effective tariff rates at levels that have not been seen in a century and a highly unpredictable environment.

Global headline inflation is expected to decline at a slightly slower pace than what was expected in January, the organisation says in its report summary.