Think tank revises SA growth forecast upwards
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JOHANNESBURG - NKC African Economics has revised up South Africa's 2021 growth forecast to 2.5 percent on improvements in some aspects of its economic recovery tracker in March.
The research think tank on Friday said the South African Recovery Tracker (SART) rose by 4.3 points to 82.6 points in March due to improvements in mobility, Google Trend searches and a decrease in new Covid-19 cases.
NKC senior economist Pieter du Preez said the improvement in mobility was especially encouraging as the Google Mobility index had proven to be a good indicator of overall economic growth.
Du Preez said although the improvement in mobility was a positive sign, the average score for the first quarter of 2021 was still lower than the score recorded in the fourth quarter of 2020.
“Taking into consideration the latest SART movements, and especially the improvement in the mobility scores, we have decided to revise our economic growth forecast for this year higher to 2.5 percent,” du Preez said.
“In addition, two consecutive months of increases in the Absa Purchasing Managers’ Index (PMI) and an acceleration in new vehicle sales in March also prompted us to revise our growth forecast for 2021.”
South Africa’s economic rebound has been given momentum by declining new Covid-19 cases, the easing of lockdown restrictions, and a ramping up of the vaccination drive.
Covid-19 cases have been on the decline, averaging less than 1 500 a day, even as there were fears that the long Easter weekend would result in another wave of infections.
The government has secured a combined 51 million doses of vaccines in the battle against Covid-19, that include, 31 million from pharmaceuticals Johnson & Johnson which is a one dose vaccine, and 20 million from Pfizer’s two dose vaccine.
Though still very low, NKC’s growth forecast review follows that of the International Monetary Fund (IMF) that also revised upwards its South Africa growth prospects for 2021, due to a stronger than expected global economic rebound of 6 percent.
The IMF said South Africa’s gross domestic product (GDP) would now grow at 3.1 percent this year, up from a revised 2.8 percent forecast in January due to concerns related to the the government’s vaccination programme.
For 2022, the IMF in its World Economic Outlook, said the South African economy would advance by 2 percent, up from the previous estimate of 1.4 percent before moderating at 1.6 percent in 2026.
The IMF’s outlook is slightly lower than the SA Reserve Bank and the National Treasury estimates, which expect the economy to rebound by 3.3 percent and 3.8 percent this year, respectively.
The lender of last resort also said inflation pressure would remain contained in most countries, including South Africa, where inflation had remained at record lows since the pandemic.
The IMF’s World Economic Outlook reflected higher than expected growth outturns in the second half of the year for most regions, after lockdowns were eased, and as economies adapted to new ways of working.