SA’s economy will only recover before 2025 if vaccine rollout speeds up, says OECD analysis
- South Africa’s economy is only expected to recover to pre-pandemic levels in 2025.
- This is far longer than the predictions for G20 countries, with the exception of Argentina, according to the Organisation for Economic Co-operation and Development.
- But South Africa’s prospects could improve if the vaccine rollout is sped up dramatically.
- If not, economically destructive lockdowns loom, with the service and tourism sectors bearing the brunt, the organisation predicts.
- For more stories go to www.BusinessInsider.co.za.
South Africa’s economy is unlikely to recover to pre-pandemic levels before 2025 due to the slow vaccination rollout and low consumer spending, according to the Organisation for Economic Co-operation and Development (OECD).
Economies around the world are expected to rebound in 2021, with most developing nations on track to reach their vaccination goals within the next quarter and resume trade at pre-pandemic levels. But the latest gross domestic product (GDP) projections offered by the OECD, which analyses advanced and emerging economies within the G20 forum, are more optimistic than those presented in December 2020.
Global economic growth is expected to reach 5.8% this year, with the United States, United Kingdom, India, and China outpacing this worldwide average. Next year’s GDP growth is expected to be more muted at 4.4%, but 75% of countries included in the OECD report are predicted to recover to pre-pandemic levels by the end of 2022.
Spain and Mexico are expected to recover in 2023, while Saudi Arabia’s economy is projected to rebound in 2024. South Africa, forecast to have one of the slowest economic recoveries in the world, is unlikely to recover before 2025, according to the OECD.
The only nation with a weaker prospect is Argentina, which the OECD predicts will need almost seven years to exceed GDP levels recorded in 2019.
Developing economies in the G20 forum are expected to bounce back stronger than the global average in 2021 and 2022, with GDPs growing by 6.3% and 4.7% respectively. South Africa’s projected growth over the next two years is much more muted than the average represented by its counterparts, ticking up by just 3.8% in 2021 and 2.5% in 2022.
“Countries that have been quick to vaccinate their population against Covid-19 and that are managing to control infections through effective public health strategies are seeing their economies recover more quickly,” said the OECD in its latest Economic Outlook report published on Monday.
Further lockdowns which subdue economic activity pose a great danger to GDP recovery and with less than 1% of South Africa’s population fully vaccinated against Covid-19, multiple waves of infection have the potential to stifle the country’s growth.
“A fast rollout of vaccination would lift business confidence and investment but failing to do so would harm the economy,” says the OECD of South Africa’s rollout.
South Africa’s vaccine rollout is listed as being the slowest of any country assessed by the OECD by a large margin. In terms of doses administered per 100 people by 24 May, South Africa records just one. This is far below the vaccination rate recorded in India (14), Brazil (28), China (27), France (49), and Germany (54).
South Africa’s three-phase vaccine programme, which was first rolled out in February – later than all other countries listed by the OECD – has administered almost 1 million doses. It aims to have 67% of the population, some 40 million people, fully vaccinated by early 2022.
To reach this target, at least 150,000 doses will need to be administered every day. This is a long way off from the 10,000 average number of daily vaccinations recorded since the rollout first began.
In addition to the threat of recurring lockdowns, a slow vaccination rollout will also subdue employment and isolate the tourism sector, according to the OECD.
And while growth in the agricultural and mining sectors continue to lead South Africa’s recovery, manufacturing and construction remains subdued, “affected by low demand, destocking and persistent bottlenecks to production.”
“The service sector is still impacted, held back by the low level of tourism, transport and trade,” noted the recent study.
South Africa also ranks last out of more than 30 countries profiled by the OECD in its study of exports of services and goods in comparison to 2019 levels. South Africa’s service exports are still down nearly 60% compared to pre-pandemic levels, with the export of goods up by just 5%.
“Trade is also playing a role [in economic recovery]. Consumers have been spending less on services and more on goods since the pandemic began,” explained the OECD.
“The pick-up in merchandise trade has benefitted countries heavily involved in supply chains, particularly pharmaceuticals, medical supplies, and IT material.”
(Compiled by Luke Daniel)
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