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Engineering News reports that Nedbank’s research team has predicted that SA’s economy will grow by 2% this year, although the recovery will be uneven in respect of various industries.
Nonetheless, load-shedding more severe than Stages 1 and 2 could reduce growth by 20 basis points and there remains downside risks in the form of Covid-19 and the uncertain nature of further variants and waves. The research team found that, compared with pre-pandemic levels, construction, trade and catering were 20% down and the worst affected industries. Only the finances, financial services and personal services industries are emerging slightly above pre-pandemic levels. Further downside risks to growth forecasts include global growth for 2022 being revised marginally downward by the World Bank and the International Monetary Fund (IMF). A key risk in terms of growth expectations for SA is the growth of its largest export market China, which consumes more than half of SA’s mineral exports and is a key strategic trading partner. Nedbank expects inflation to tick up over the medium term, and has forecast 4.4% for 2022, but this will be highly dependent on the oil price and administered prices as a whole. Nedbank expects 2023 inflation to be 5%. Meanwhile, labour has been hard hit during the pandemic and more than two-million jobs have been lost over the past two years, with the bulk being in the formal sector and within some secondary industries. Nedbank economic research analyst Reezwana Sumad commented: "From an employment perspective, without improvements in effecting structural reforms and increasing infrastructure spending to increase the potential growth, we believe employment will struggle and the unemployment rate is expected to remain elevated above 30% for several years." While there were a few government interventions to mitigate this challenge, including a public works programme that helps to upskill youth and provide temporary employment, the big focus should be on infrastructure spending, she advised. But, structural reforms to facilitate infrastructure development will take time and infrastructure projects will take at least three years to make a difference in employment and contribute positively to GDP.
- Read the full original of the report in the above regard at Engineering News
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