SA’s growth prospects looking up – think tank
NKC AFRICAN Economics has raised South Africa’s growth forecast for this year to 2.5 percent after some aspects of its economic recovery tracker improved last month.
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 particularly encouraging, because the Google Mobility Index has proved 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 this year was still lower than the score recorded in the fourth quarter of last year.
“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 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 a decline in new Covid-19 cases, the easing of the lockdown, and the ramping up of the vaccination drive.
Covid-19 cases have been on the decline, averaging less than 1 500 a day, even though 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, which include 31 million doses from Johnson & Johnson, which is a onedose vaccine, and 20 million of Pfizer’s two-dose vaccine.
Although low, NKC’s growth forecast review follows that of the International Monetary Fund (IMF), which raised its forecast of South Africa growth prospects for this year, due to a stronger-than-expected global economic rebound of 6 percent.
The IMF said South Africa’s gross domestic product would grow at 3.1 percent this year, up from a revised 2.8 percent forecast in January due to concerns related to the government’s vaccination programme.
The IMF, in its World Economic Outlook, said the South African economy would advance by 2 percent next year, up from the previous estimate of 1.4 percent, before moderating at 1.6 percent in 2026.
The IMF’s outlook was slightly lower than the estimates of the South African Reserve Bank and the National Treasury, which expect the economy to rebound by 3.3 percent and 3.8 percent, respectively, this year.
The IMF said inflation would remain contained in most countries, including South Africa, where inflation has been at record lows since the onset of the pandemic.
The World Economic Outlook reflected higher-than-expected growth in the second half of the year for most regions, after lockdowns were eased and as economies adapted to new ways of working.