- Finance Minister of South Africa Enoch Godongwana has stated that going by the current trends, South Africa’s economic growth will bounce back to pre-pandemic levels in late 2022, a year earlier than expected.
- The projections he said are largely based on the rising global demand, higher commodity prices and the easing of Covid-19 lockdown restrictions.
- Tabling his maiden Medium-Term Budget Policy Statement (MTBPS) in Parliament yesterday, Godongwana said that these positive developments had pushed domestic economic activity to recover more rapidly than anticipated in the 2021 Budget.
Finance Minister of South Africa Enoch Godongwana has stated that going by the current trends, South Africa’s economic growth will bounce back to pre-pandemic levels in late 2022, a year earlier than expected. The projections he said are largely based on the rising global demand, higher commodity prices and the easing of Covid-19 lockdown restrictions. Tabling his maiden Medium-Term Budget Policy Statement (MTBPS) in Parliament yesterday, Godongwana said that these positive developments had pushed domestic economic activity to recover more rapidly than anticipated in the 2021 Budget.
Lower interest rates, strong international demand and higher commodity prices helped the South African economy to recover more quickly than expected In the first half of 2021. South Africa’s GDP is expected to grow by 5.1 percent in 2021 against a 3.3 percent estimated in February. In 2020, the SA economy shrunk by 6.4 percent. However, according to the Real GDP growth projections for the next three years, it is expected to moderate to 1.8 percent in 2022, 1.6 percent in 2023, and 1.7 percent in 2024 far below the required rate to meet the country’s development needs. Structural weaknesses such as inadequate electricity supply are major impediments for economic growth, he felt. He underlined that the speed and scale of vaccination is of prime importance for sustaining South Africa’s economic recovery.
As regards sectorial performance, the National Treasury’s Budget Review estimated higher global prices for agricultural commodities but moderate growth in mining production. In the manufacturing sector, electricity disruptions, raw material shortages, and rising input costs were projected to restrain output in the short to medium term. Sovereign credit ratings downgrades also remained a systemic risk for the finance sector. The economic outlook and the risks associated with it called for accelerating economic reforms focussing on improving competitiveness, productivity, investment and employment for long-run growth Godongwana said.
