SOUTH Africa’s economic recovery from the impact of the Covid-19 pandemic has been uneven on the country’s industry, but particularly very slow on labour-intensive sectors, according to the SA Reserve Bank (SARB) when it tabled its 2020/21 annual report to Parliament’s Standing Committee on Finance yesterday.
In its macroeconomic overview and outlook, the SARB pointed to a sharp but divergent recovery in the global economy as Covid-19 vaccination was increasing amid the spread of the Delta variant.
SARB governor Lesetja Kganyago said domestic growth, however, was not high enough and recovery to pre-pandemic levels could be expected around 2023.
Kganyago said South Africa’s recovery was weaker than most peers and so is investment, as gross fixed capital formation was hovering around 15 percent of the gross domestic product compared to 35 percent in India.
“Commodities are at the centre of South Africa’s recovery, buoyed by strong global recovery,” he said.
“Our robust terms of trade are supporting the current account and the strong rand, and commodities are also driving the nominal GDP higher.”
However, Kganyago said that the recovery in employment remained weak, though earnings had returned to their pre-pandemic levels in the private and formal non-agricultural sector.
The SARB showed that except for the agricultural sector, employment in all sectors had declined – particularly in construction, transport and finance.
Employment had remained stable in the mining industry, services and electricity sectors, and actually grew in the agricultural sector.
Kganyago warned that electricity supply shortages remained a risk to economic recovery, as well as the possibility of future Covid-19 waves.
He said the cumulative load shedding for 2020 was more than that experienced in 2019, adding that load shedding continued to hit the country as the economy reopened.
“You can imagine if the acceleration of the economy was even faster than what we experienced so far, we would have even more significant load shedding,” he said.
Meanwhile, the SARB reported that its net profit after tax of R3.6 billion was higher than the previous financial year, due to R1.54bn profit in the corporation for public deposits.
However, net profit after tax of R1.68bn fell by 74 percent, compared to R6.38bn the previous year.
The SARB said this was largely due to decreased fair value gains of R7.7bn as a result of the rand appreciation.
SA Mint’s net profit after tax of R0.3bn fell by 67 percent compared with the previous year’s R1bn with R450 million declared in dividends.
BUSINESS REPORT