South Africa's economy to grow by 2.1%

The country's gross domestic product (GDP) expanded by 1.1% quarter-on-quarter in the first three months of 2021.

22 June 2021 | Economics

Concerns about load-shedding, a third wave of Covid-19 infections, and the pedestrian local vaccine rollouts have been the crucial factors explaining the hesitancy to boost growth. Hugo Pienaar, Economist: Bureau for Economic Research.

VUYANI NDABA

South Africa's economy is on track to grow 4.1% in 2021, above recent median forecasts for Sub-Saharan Africa as a whole but not enough to make up for last year's huge coronavirus-related contraction, a Reuters poll found on Friday.

The rebound comes after a 7.0% contraction last year and the latest median forecast of economists polled in the past week was 0.2 percentage points better than in last month's survey. Next year's growth was expected to slow to 2.4%.

Eskom, which supplies most of the electricity to Africa's most industrialised nation, has been implementing regular power cuts, or load-shedding, due to ageing coal-fired power stations. A slow pace of Covid-19 vaccinations is another drag on growth.

"Until now, concerns about load-shedding, a third wave of Covid-19 infections, and the pedestrian local vaccine rollouts have been the crucial factors explaining the hesitancy to notably boost the real GDP growth forecast for 2021," said Hugo Pienaar at the Bureau for Economic Research.

The country's gross domestic product (GDP) expanded by 1.1% quarter-on-quarter in the first three months of 2021 on a seasonally adjusted basis, after an expansion of 1.5% in the fourth quarter of 2020.

Pienaar added risks were now materialising but better-than-expected Q1 GDP data, as well as indications that at least some of the momentum was sustained this quarter, imply GDP growth of potentially well above 4% in 2021 was becoming a reality.

On a seasonally adjusted and annualised basis, the economy grew 4.6% quarter-on-quarter, following growth of 5.8% in the previous quarter.

South Africa has entered a third wave of infections, leading authorities to impose a stricter level 3 lockdown amid a surge in daily cases. The level includes restrictions on alcohol sales and tougher rules around public gatherings.

Medians in a Reuters poll taken in April showed sub-Saharan Africa was expected to grow 3.3% in 2021 after contracting nearly 2% last year.

Statistics South Africa said in its latest GDP report that during periods of economic instability annualised readings can be misleading because they exaggerate growth rates unlikely to be repeated. - Nampa/Reuters

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