- Global Growth Outlook: IMF raised global economic growth forecast to 3.3%, primarily driven by U.S
- Inflation Trends: Global headline inflation is projected to decline to 4.2% in 2025 and further to 3.5% in 2026
- Regional Disparities: Sub-Saharan Africa, particularly Zimbabwe, is set for a significant economic rebound, while the Euro Area faces downgrades
Harare- The International Monetary Fund (IMF) has revised its global economic growth forecast upward to 3.3% for 2025, driven primarily by an upward revision in the US economy, which offset downgrades in other major economies.
This incremental growth trajectory is anticipated to converge with advanced economies' inflation targets earlier than emerging market and developing economies.
Notwithstanding this optimistic outlook, the projected growth rate remains below the historical average of 3.7% recorded between 2000 and 2019.
The prevailing global economic fragmentation, exacerbated by the Russia-Ukraine war and the Israel-Hamas war, has jeopardized international trade and supply chains.
These geopolitical tensions have contributed to escalated food prices, stalled reductions, and heightened inflation, prompting central banks to implement interest rate hikes.
Anchoring the growth prospects is the US economy which is expected to expand by 2.7% in 2025, bolstered by robust labour markets and accelerating investment.
Conversely, the Euro Area's growth projection has been downgraded to 1.0% from 1.2%, hindered by the geopolitical strains from the Israel-Hamas and Russia-Ukraine conflicts, which directly impact European economies.
The continent experienced weaker-than-expected economic momentum at the close of 2024, particularly in the manufacturing sector, alongside heightened political and policy uncertainty, leading to a downward revision. However, growth is projected to recover to 1.4% in 2026, driven by stronger domestic demand, easing financial conditions, and improved consumer confidence.
In Asia, Japan's economy is forecasted to remain steady at 1.1%, and China's GDP growth was revised slightly higher to 4.6% from vs 4.5% while India's growth prospects are maintained at 6.5%.
The UK's economic growth projection has been revised upward to 1.6%. On the inflation front, the IMF anticipates global headline inflation to ease to 4.2% in 2025 and further decline to 3.5% in 2026.
In the African region, IMF estimates growth to reach 4.2% in 2025-26, driven by improved commodity prices.
Other African countries are also expected to experience growth, with South Africa's economy projected to expand by 1.8% in 2025, up from 0.8% in 2024. Zambia's growth is expected to accelerate to 6.2% in 2025, while Tanzania's economy is projected to expand by 5.8%.
Mozambique's growth is expected to remain steady at 4%, and Botswana's economy is anticipated to recover strongly, with growth projected at 5.3% in 2025.
Zimbabwe's economic growth is projected to reach 6.2% in 2025, following sluggish growth of 2% in the preceding year.
The growth prospects are largely driven by an anticipated 12.5% expansion in the agriculture sector, which is expected to benefit from improved rainfall.
However, the country's growth prospects are vulnerable to erratic weather conditions, as evidenced by the disrupted planting season in 2024.
As of December 2024, the country has experienced minimal rainfall, disrupting many small-scale farmers reliant on natural precipitation, with the traditional planting season commencing in October.
While rainfall distribution improved in January 2025, many farmers who planted early have already suffered from the adverse weather conditions that persisted through December 2024.
Equity Axis News
