By Lehlohonolo Lehana.

The International Monetary Fund (IMF) on Tuesday raised its 2023 global growth estimates slightly given resilient economic activity in the first quarter, but warned that persistent challenges were dampening the medium-term outlook.

The IMF in its latest World Economic Outlook said inflation was coming down and acute stress in the banking sector had receded, but the balance of risks facing the global economy remained tilted to the downside and credit was tight.

The group revised South Africa's GDP growth expectations upwards from 0.1% in its April review to 0.3% in July.

This is because South African businesses proved to be resilient to the persistent outages that have been dogging the economy since September 2022. This resilience revealed itself in the GDP print for the first quarter, which showed some marginal growth, despite load shedding.

An upward revision follows the IMF's April revision down to 0.1%, where the global funder anticipated that load shedding would wipe most if not all prospects of economic growth in South Africa.

At the time, the group warned that persistent load shedding and the state's failure to mitigate the energy crisis in time would likely stunt growth.

While South Africa has by no means crawled out of that risky environment, the country's first quarter GDP print showed that local businesses and the industries they operate in were proving to be far hardier than analysts gave them credit for.

"In South Africa, growth is expected to decline to 0.3% in 2023, with the decline reflecting power shortages," the IMF said.

"(However), the forecast has been revised upward by 0.2 percentage points since the April 2023 WEO, on account of resilience in services activity in the first quarter."

Economists and analysts have noted that while load shedding continues to be the biggest drag on the economy at present, businesses and, indeed, households have largely adapted – albeit at a huge personal and operational cost.

South Africa's GDP growth in the first quarter – a still-paltry 0.4% growth q-o-q – was boosted by better-than-expected performances in the food and beverages, trade, business and personal services sectors, lifting up the declines seen in the country's other six sectors.

The IMF's current projection of 0.3% growth for South Africa is still massively reduced from its January estimate of 1.2% and is more in line with the SARB’s latest estimate of 0.4%, announced during its latest Monetary Policy Committee meeting statement.

The Reserve Bank has been clear that load shedding and the prevailing energy crisis create sweeping downside risks to the economy and that the outages alone have wiped a full two percentage points from South Africa’s growth prospects for 2023. In other words, without load shedding, GDP growth could have been upwards of 2.4%.

Also, despite the more positive slant from the IMF, the latest estimates from South African banking groups and finance houses still present an extremely low-growth range for GDP output this year, with at least one bank still pencilling in a recession at -0.1%.

Overall, South Africa's GDP for 2023 is still expected to be flat and the weakest out of the leading emerging market economies covered in the IMF's outlook.