The global health crisis occasioned by COVID 19 has greatly affected African economies. Many African countries will see depressed economic growth, a continued stress on provision of basic needs and food, depressed consumer spending and a slow down in government projects. The investment climate just like in almost all global economies looks bleak though there are forecasts that with the developments in vaccines we may begin to see a slow growth in 2021.
This pandemic especially for Africa will need new thinking as South Africa’s President Cyril Ramaphosa states:
“We are determined not merely to return
our economy to where it was before the coronavirus,
but to forge a new economy in a new global reality.”
The new economy and the new global reality were at the centre discussions at the 3rd South Africa Investment Conference #SAIC2020.
Here is South Africa’s outlook for recovery and renewal:
• South Africa’s gross domestic product is expected to decline by between 7.5% and 9.5% in real terms in 2020,according to most forecasts. Projections of the rebound anticipated in 2021 range from 2.0% to 4.5%, with modest
economic growth generally forecast for the subsequent year.
• Operating and trading conditions are likely to remain difficult for some time, implying that the economy’s recovery will be gradual. Structural challenges will continue to constrain its growth potential in the medium-term, but these should be progressively addressed as envisaged in South Africa’s Economic Reconstruction and Recovery Plan.
• Household consumption spending will be adversely affected by job losses, lower disposable incomes and uncertainty in the shorter term, while fixed investment activity is only likely to start recovering meaningfully once there are clearer signs of a sustained normalisation of consumption and production domestically as well as globally. A significant recovery of consumer, business and investor confidence is crucial for economic expansion.
• South Africa’s export performance is expected to remain sub-par in the short-term due to weak global demand, but a gradual recovery is anticipated in the medium-term as economic conditions improve in world markets. Export development opportunities are likely to emerge progressively in regional markets as the Africa Continental Free Trade
Area agreement is implemented.
• Monetary policy is likely to remain growth-supportive, thus continuing to provide some relief to businesses and consumers. However, there will be limited space for additional fiscal support in light of government’s commitment to fiscal consolidation and debt stabilisation. A dedicated focus on improving and strengthening revenue collection, ensuring better utilisation of limited resources, clamping down on the illegal economy, as well as prioritising expenditure for greater impact, should contribute in this regard.
You can read the opportunities in the SA Economy and Covid-19 crisis (Recovery and Renewal) report here https://bit.ly/3q6KELA
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