The IMF’s growth statistics for 2021 show that growth in the UK, Eurozone, and China was higher than expected. Growth in South Africa, Namibia, and the United States was lower than expected.

• The war in the Ukraine has resulted in a sharp decrease in growth expectations for the Eurozone, United States, and the UK.
• Russian growth was revised sharply lower and could be revised lower again if the conflict continues.
• China’s growth has been revised lower following a resurgence of COVID cases and new lockdowns.
• In the United States, growth expectations were revised lower due to the likelihood of protracted supply chain issues, and tighter monetary policy.
• In South Africa, the recent KZN floods have resulted in a state of emergency. The impact of the floods is likely to result in lowered growth in 2022.

Higher oil prices on the back of the Russia-Ukraine war have created inflationary risks. If this is sustained, it will cause a drag on global growth in the coming months. In many regions, inflation has continued to escalate, pushing to multi-decade highs. Inflation has impacted both developed and emerging markets including South Africa.

The South African Reserve Bank increased interest rates by 25 bps in both January and March 2022. The repo rate is 4.25%, which is still lower than pre-pandemic levels. If global central banks continue to increase interest rates, it is expected that the South African Reserve Bank would act similarly.