Mr. Tinashe Mpasiri on The June 2023 Global Economic Outlook in Turbulent Times

Mr. Tinashe Mpasiri, a member of the Banking On Africa’s Future (BOAF) Network and Director of Corporate Literacy under the Justice Under Rule Of Law Initiative (JUROL), analyzed provided data on the global economic outlook and its impact on the South African economy, considering the scheduled power cuts and the $1 billion USD hydrogen green fund created by the Netherlands and Finland to ease the energy crisis, commented as follows:

The data from the McKinsey Global Survey suggests that global executives are more positive than negative about the current state of the global economy. Respondents also express brighter views about their own countries’ economies and the world economy, indicating an overall optimistic global outlook. However, they still identify geopolitical instability and inflation as major risks to both domestic and global growth.

In terms of domestic conditions, respondents report more positive views on their home economies than in the past year. Specifically, 48% of respondents say economic conditions at home have improved in the past six months. Notably, India stands out with a significantly more bullish view on its economy compared to the previous quarter.

Regarding the interest rate environment, there seems to be an evolving perspective. For the first time since June 2021, less than half of the respondents expect their countries’ interest rates to increase in the coming months. This shift in perception suggests a potential change in monetary policy and interest rate expectations.

Turning to the global economic outlook, executives’ optimism continues to grow. Respondents report improved global economic conditions and express a positive outlook for the future. While geopolitical instability and inflation remain top risks to global growth, respondents also identify emerging threats such as income inequality and transitions of political leadership.

Considering the South African context, the global economic outlook has significant implications for the country. South Africa relies on international trade and investment, so a positive global economic outlook can potentially benefit its export-oriented industries and attract foreign investment. However, risks such as geopolitical instability and inflation can have adverse effects on the South African economy, as they can disrupt trade flows and increase input costs.

The scheduled power cuts in South Africa pose a specific challenge to the economy. Reliable energy supply is crucial for economic activities across sectors. The power cuts can lead to disruptions in production, affecting businesses and potentially reducing economic growth. Therefore, addressing the energy crisis should be a priority to ensure a stable and sustainable energy supply that supports economic activities.

The creation of a $1 billion USD hydrogen green fund by the Netherlands and Finland presents an opportunity for South Africa to ease its energy crisis. Hydrogen can be a clean and renewable energy source that can help diversify South Africa’s energy mix and reduce its reliance on fossil fuels. The fund can support the development of hydrogen infrastructure, research, and projects in South Africa, providing a boost to the energy sector and contributing to long-term energy security.

In conclusion, the global economic outlook, as indicated by the McKinsey Global Survey, shows increasing optimism among global executives. While risks such as geopolitical instability and inflation persist, there is a positive outlook for the global economy. In the case of South Africa, the global economic conditions and risks have implications for its trade and investment prospects. The scheduled power cuts and the hydrogen green fund from the Netherlands and Finland further shape the economic landscape in South Africa, with the need to address the energy crisis and seize the opportunity to transition to cleaner and more sustainable energy sources.