{"id":857660,"date":"2026-04-20T10:38:52","date_gmt":"2026-04-20T08:38:52","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=857660"},"modified":"2026-04-20T10:38:55","modified_gmt":"2026-04-20T08:38:55","slug":"recession-warning-for-south-africa-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/857660\/recession-warning-for-south-africa-2\/","title":{"rendered":"Recession warning for South Africa"},"content":{"rendered":"\n

The International Monetary Fund (IMF) has warned that the global economy faces recession if the conflict in the Middle East continues\u2014with energy-importing countries like South Africa at even greater risk.\u00a0<\/p>\n\n\n\n

In a report published last week, IMF economists warned that a longer or broader conflict could significantly weaken growth and destabilise financial markets.<\/p>\n\n\n\n

In the worst-case scenario, in which supply disruptions persist into next year, the IMF predicts global growth to fall to around 2%.<\/p>\n\n\n\n

According to the IMF, this would mean \u201ca close call for a global recession”. Global growth has fallen short of 2% only four times since 1980, it said.<\/p>\n\n\n\n

The economists also warned that the war in Iran could have severe consequences far outside the region\u2014especially for energy-importing countries like South Africa.<\/p>\n\n\n\n

In a recent interview<\/a>, Xhanti Payi, economist and director at Inani Strategies, said the recession concerns are not only credible but increasingly likely as global tensions intensify. <\/p>\n\n\n\n

He said the threat \u201cis quite real.\u201d <\/p>\n\n\n\n

He noted that the global economy is coming off a vulnerable recovery from COVID-19 and is now being hit by fresh shocks, including trade disruptions and geopolitical conflict.\u00a0<\/p>\n\n\n\n

As a result, he cautioned that South Africa is facing a serious downward trend, particularly as new crises emerge around energy and logistics.<\/p>\n\n\n\n

\u201cThe concern is not just about the war itself, but what it does to oil prices, to inflation, investor confidence, and already fragile growth,\u201d he explained.<\/p>\n\n\n\n

He pointed out that global inflation forecasts have worsened significantly, especially for emerging markets. <\/p>\n\n\n\n

\u201cThere has certainly really actually steepened their forecast for inflation globally, especially those that are vulnerable that don\u2019t have their own sources of fuel,\u201d he said.<\/p>\n\n\n\n

Payi also highlighted a critical shift in how markets are interpreting the crisis. What was once seen as temporary is now becoming entrenched.<\/p>\n\n\n\n

South Africa at risk <\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

For South Africa and other emerging markets, the risks are even more severe. Payi noted that these economies are heavily dependent on global growth and external investment.<\/p>\n\n\n\n

He added that limited fiscal capacity makes it harder to cushion shocks, particularly in critical sectors like agriculture and energy.<\/p>\n\n\n\n

At a domestic level, Payi said the key pressure points to watch are fuel and food. He warned that disruptions to fertiliser supply and rising input costs could push inflation higher again. <\/p>\n\n\n\n

\u201cThese were areas where inflation had been easing, but are now where we are finding the most risk,\u201d he said. <\/p>\n\n\n\n

Prior to the outbreak of the conflict, the IMF had forecast South Africa\u2019s GDP growth at 1.4% for 2026. This has now been cut<\/a> to just 1.0%.<\/p>\n\n\n\n

The downgrade reflects a stark turnaround after the country’s fortunes swung in a more positive direction at the end of 2025 and early 2026.<\/p>\n\n\n\n

In the January 2025 outlook, the IMF expected South Africa\u2019s economy to grow by 1.5% at the start. However, this tanked to just 1.0% by July as the United States hit global markets with its tariffs.<\/p>\n\n\n\n

But even accounting for the hit to global growth, South Africa appears to come off much worse.<\/p>\n\n\n\n

The projected growth for South Africa for 2026 is the lowest among emerging markets and developing economies, including Russia, which is at war.<\/p>\n\n\n\n

Adding to the pain, the IMF has warned that downside risks dominate its outlook, meaning worse may yet lie ahead.<\/p>\n\n\n\n

The key warning for South Africa\u2014which is already struggling to break more than a decade of stagnation\u2014is that the impact on emerging market and developing economies would be almost twice that on advanced economies.<\/p>\n\n\n\n

Bloomberg reported that commercial traffic through the Strait of Hormuz is at a virtual standstill on Monday, 20 April, following a brief reopening over the weekend that ended with the first US seizure of an Iranian vessel.<\/p>\n\n\n\n

Transits through the waterway have reduced to a trickle over seven weeks of war in the Persian Gulf, as Iran tightens control in retaliation for US and Israeli strikes.<\/p>\n\n\n\n

Oil jumped, pushing US stocks and Treasuries lower after a turbulent weekend in the Middle East cast doubt on the prospects for peace talks ahead of a looming ceasefire deadline.<\/p>\n\n\n\n

Brent rose 5.4% above $96 a barrel as the US Navy carried out its first seizure of an Iranian vessel in the Strait of Hormuz.<\/p>\n","protected":false},"excerpt":{"rendered":"

The IMF has warned that the global economy faces recession if the conflict in the Middle East continues\u2014with energy-importing countries like South Africa at even greater risk.\u00a0<\/p>\n","protected":false},"author":92,"featured_media":857664,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[22028,853],"class_list":["post-857660","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-international-monetary-fund-imf","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/857660","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=857660"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/857660\/revisions"}],"predecessor-version":[{"id":857681,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/857660\/revisions\/857681"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/857664"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=857660"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=857660"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=857660"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}