By Lehlohonolo Lehana.
The International Monetary Fund (IMF) projects South Africa’s economic growth will remain stable at 1.1%, while lowering its global growth forecast to 3% amid renewed Middle East tensions, rising inflation risks and continued uncertainty over the world economic outlook.
In its July 2026 update to the World Economic Outlook, the IMF noted that while near-term growth is stable, South Africa faces persistent headwinds from domestic structural bottlenecks and global geopolitical uncertainties.
However this remains below the South African Reserve Bank’s prediction of 1.2 per cent.
Global economic growth is estimated at 3% this year, down from 3.1% in its April forecast, the IMF said.
The projection was made before renewed exchanges of fire between the United States and Iran in recent hours.
US President Donald Trump declared Washington’s ceasefire with Tehran over, before adding that US forces would strike Iran hard in the coming night.
“Developments overnight illustrate the uncertainty and risks that surround the outlook,” said Petya Koeva Brooks, deputy director at the IMF’s research department.
“We’re going to be monitoring developments very closely,” she said.
The IMF’s updated World Economic Outlook dropped the three separate scenarios it had released in April, before the US and Iran reached their ceasefire deal, reverting to a more traditional baseline forecast.
The IMF left its 2026 growth forecast for the US economy unchanged at 2.3% and raised its 2027 forecast by 0.1 percentage point to 2.2% from the April forecast.
It lowered the 2026 growth forecast for the euro area to 0.9% from its previous forecast of 1.1% in April, and left its 2027 forecast unchanged at 1.2%.
Japan’s growth forecast for 2026 edged lower by 0.1 percentage point to 0.6%, with the 2027 forecast raised by the same amount to 0.7%. South Korea’s growth was revised upward by 0.7 percentage point to 2.6%, given strong growth in AI hardware exports.
Emerging market and developing economies also saw a 0.1 percentage point cut in their growth forecast to 3.8% in 2026, while the 2027 forecast was raised by 0.3 points to 4.5%
China’s growth was now expected to reach 4.6% in 2026 after a strong first quarter, up from the April forecast of 4.4%, with 2027 growth expected to reach 4.1%, up from 4% in April.
Read the full World Economic Outlook here: IMF World Economic Outlook.