The better news about South Africa’s growth performance in the second quarter of 2021 is welcome. It suggests a slow but steady recovery from the shocks experienced as a result of the further lockdowns and civil unrest that occurred earlier in the year.
Prof Raymond Parsons, economist from the Business School of the North-West University (NWU), commented on the gross domestic product (GDP) growth figures for the second quarter of 2021 that were released by STATS SA on Tuesday, 7 September.
“Although much of the economic improvement is off a low base, it is encouraging that half the economic sectors in the economy reflected growth during the second quarter of 2021. Exports and consumer spending have been particularly robust and have supported renewed growth.”
Prof Parsons says that, as the economy continues to recover, present economic trends suggest that GDP growth for 2021 as a whole is likely to be about 4,5% to 5%.
“Although these growth trends are a tribute to the resilience of economic activity in the midst of serious socioeconomic challenges, the economy is not by any means out of the woods yet. The impact of the negative factors in the second quarter of 2021 still has to be felt in the third quarter of 2021. Economic growth is not high enough yet to stabilise unemployment in South Africa and growth forecasts for 2022 and 2023 remain around 2% or less.”
According to him, the “bounce back” in the economy therefore needs to be translated into sustained job-rich growth.
He explains that fixed capital formation in the second quarter of 2021 rose by 0,9% after a decline of 3,1% in the first quarter. The small turnaround in fixed capital investment is also off a low base but is a positive development. Investor confidence will nonetheless continue to require careful nurturing in the period ahead.
“South Africa needs to proactively build on widening and deepening the current economic recovery in meaningful ways. This means that the usual constraints on higher inclusive growth – such as the lack of energy security, weak confidence and slow progress with structural reforms – will continue to shape the pace of South Africa’s progress towards a bigger, stronger and better economy. They still need urgent attention.”