SOUTH Africa’s economy will rebound to pre-pandemic levels this year as the increased Covid-19 vaccination rate and declining number of new cases continue to support a robust economic activity.
This was the view of the World Bank, which issued its Global Economic Prospects Report January 2022 yesterday.
The report showed that South Africa’s gross domestic product growth for 2021 was expected to pick up more than a full percentage point above the World Bank’s June projections.
The World Bank said growth in South Africa was estimated at 4.6 percent in 2021, reflecting a strong rebound in mining, manufacturing and services sectors.
It said South Africa’s economy was, however, projected to grow by 2.1 percent in 2022 and 1.5 percent in 2023, reflecting low base effects.
The World Bank said improved control over the Covid-19 virus outbreaks along with more widespread vaccinations were expected to continue to support the recovery in services sectors, including tourism.
About 27 percent of the population in South Africa had been fully vaccinated by the end of 2021, and the government has further relaxed lockdown restrictions.
“Private consumption and investment are projected to firm somewhat, recovering from last year’s virus restrictions and social unrest,” the World Bank report said.
“However, persistent large-scale unemployment, high inequality and structural impediments to growth will continue to weigh on economic activity.
“Many constraints on long-term growth in South Africa predate Covid19, including the legacy of weak public finances and slow implementation of reforms needed to boost productivity and employment growth.
“Rising government debt and debt service costs will continue to constrain policy space and curtail public spending, leaving gaps in essential public services and infrastructure as a major obstacle to stronger potential growth.”
The World Bank slashed its global growth forecast for 2022 and 2023, and cautioned that a rise in inflation, debt and income inequality could jeopardise the recovery in emerging and developing economies. The bank said global growth was expected to decelerate markedly from 5.5 percent in 2021 to 4.1 percent in 2022 and 3.2 percent in 2023 as pentup demand dissipates and as fiscal and monetary support is unwound across the world.
It said the slowdown would coincide with a widening divergence in growth rates between advanced economies and emerging and developing economies.
The World Bank’s managing director for Development Policy and Partnerships, Mari Pangestu, said the choices policymakers made in the next few years would decide the course of the next decade. “The immediate priority should be to ensure that vaccines are deployed more widely and equitably so the pandemic can be brought under control.
“But tackling reversals in development progress such as rising inequality will require sustained support.
“In a time of high debt, global co-operation will be essential to help expand the financial resources of developing economies so they can achieve green, resilient and inclusive development.”
BUSINESS REPORT ONLINE