Momentum revises SA 2021 growth forecast to 3.4% as the vaccination process slows

MOMENTUM Investments yesterday joined other economic think tanks in revising South Africa’s growth projections, saying the economy could rebound more than expected this year if the energy crisis and the slow roll-out of the Covid-19 vaccination programme were resolved.

Momentum said it now projected that the economy would grow at 3.4 percent, down from 3.8 percent forecast in March, as the global vaccination process slowed, with only 129 million people, or 1.7 percent of the world’s population, being fully vaccinated by the end of last month.

In South Africa, just more than 288 000 health-care workers have been vaccinated so far, with the second phase of the programme earmarked to start this week.

The 17 days of stage 2 loadshedding and the two days of stage 3 loadshedding between January 1 and March 15 saw production remain in contractionary territory in the first quarter.

Momentum economist Johann van Tonder said the renewed restrictions in many countries experiencing another wave of Covid-19 were bound to slow down economic progress in some regions.

Van Tonder said this would contribute to some disappointing economic growth rates in the first quarter.

“Given current circumstances, we estimate that the South African economy may expand by 3.4 percent in 2021 and 2.3 percent in 2022 year-onyear,” Van Tonder said.

“Our growth estimates, which are supported by the low base established in 2020, would have been higher had it not been for worries about loadshedding and the slow pace of vaccinations, which will likely act as drags on production and expenditure growth.”

Van Tonder said growth rates in 2021 and 2022 should be supported by an expected continuation of re-employment and new jobs in the middle-to-higher-income groups, which should underpin household consumption expenditure going forward.

“We also expect some inventory accumulation following a drawdown of almost R90 billion in 2020, while the opening of the world economy should support exports and imports.”