UN expects SA’s GDP to rebound by less than 3% this year
THE UN HAS forecast that South Africa’s gross domestic product (GDP) will rebound less than 3 percent in 2021 due to a number of downside risks clouding Africa’s outlook.
In its World Economic Situation and Prospects as of mid-2021 yesterday, the UN said South Africa’s GDP was projected to expand by 2.8 per cent in 2021.
This is the lowest GDP forecast for South Africa this year after an upwards growth outlook of 3.8 percent by the SA Reserve Bank, 3.3 percent by the National Treasury, and 3 percent by the World Bank.
The UN report also warned that medium-term prospects were constrained by lack of fiscal space, chronic high unemployment and lingering power shortages as Eskom fails to resolve the energy crisis.
The report said the growth outlook in several sub-Saharan African countries remained fragile, with GDP forecast to contract by 0.7 percent in the region this year.
For the rest of Africa, the UN said GDP was forecast to contact by 0.2 percent as the vaccination progress is by far the slowest in the world at only 1.2 doses administered per 100 people.
It said for many countries, economic output was only projected to return to pre-pandemic levels in 2022 or 2023.
“Given the slow pace of vaccine roll-outs and new variants of the virus, new waves of infections could trigger new lockdowns and constrain the projected recovery in the near term,” it said.
“Inflationary pressures are rising in some countries due to higher food prices, but aggregate inflation is projected to remain moderate.”
Africa’s situation is completely the opposite of its global peers as the UN said the global economy was now projected to expand by 5.4 percent in 2021, an upward revision from 4.7 percent growth forecast in January.
The UN said growth would be led by robust rebound in China and the US amid rapid vaccinations and continued fiscal and monetary support measures. Manufacturing-dependent economies had fared better, but a quick rebound looks unlikely for tourism- and commodity-dependent economies.
UN chief economist Elliott Harris called for equitable global access to vaccines to address the severe and disproportionate impacts of the Covid19 pandemic.
“Vaccine inequity between countries and regions is posing a significant risk to an already uneven and fragile global recovery,” Harris said.