South Africa’s economic growth of 1,2% in the fourth quarter of 2021 has yielded an overall positive gross domestic product (GDP) growth of 4,9% in 2021, which is a welcome rebound in the economy after the devastating -6,4% growth in 2020.

According to Prof Raymond Parsons, economist from the Business School of the North-West University (NWU), half the sectors in the economy, especially mining and agriculture, made positive contributions to the economic recovery in the final quarter of the year.

“Even though the economy is not yet back to pre-pandemic levels, the 4,9% growth in 2021 nonetheless makes up for much economic ground that has been lost and contributes to a further normalisation of economic and business activities in South Africa.”

Prof Parsons says the bulk of the momentum driving the economic rebound is now inevitably behind us. He explains that the forecasts for GDP growth over the next couple of years now remain modest – with the recent Budget expecting growth to average only 1,8% over the next three years.

“South Africa has to do much better if it wants to reduce unemployment and ensure fiscal sustainability in the years ahead. To make tangible progress on both the employment and tax revenue fronts, South Africa therefore needs to progressively aim for 4% to 5% GDP growth and do what is urgently necessary to achieve it through greater collaboration with the private sector.”

According to Prof Parsons, South Africa must now rely on new and updated economic factors, not on a “once-off” rebound, if it wants to maximise the number of jobs created at any given growth rate.

“It therefore remains essential to now get the South African economy on a higher growth trajectory by urgently capitalising on the positive commitments made in the State of the Nation Address (SONA) and the Budget to mobilise the private sector on a bigger scale and create the necessary climate to do so.”