The biggest threat to South Africa’s economic recovery right now

The National Treasury says that South Africa’s access to Covid-19 vaccines will be the key factor to its economic recovery in 2021.

Presenting in parliament on Thursday (25 February), Treasury officials projected real economic growth of 3.3% in 2021, from a low base of -7.2% in 2020. Growth is forecast to moderate to 2.2% in 2022.

“A successful vaccine rollout is likely to boost domestic economic growth, enabling renewed trade and releasing pent-up demand. Conversely, a slow rollout poses the most significant threat to economic recovery,” Treasury said.

“The far-reaching Covid-19 economic impacts exacerbated the poor outcomes of the last decade. Broader structural reforms are required to entrench an economic recovery characterised by growing investment and job creation.”

Treasury said that up to R10.3 billion will be provided for vaccine rollout for the current year, and over the next two years.

While issues such as load shedding and the high rate of unemployment have previously been seen as the country’s biggest risk factors, Treasury officials were relatively upbeat on the progress being made under president Cyril Ramaphosa’s economic recovery plan.

However, they acknowledged that more ‘decisive action’ is needed going forward.

“Embedded generation regulation will be eased within three months; emergency power procurements bids, as well as procurement of additional power in line with the IRP2019, will be announced in the coming weeks,” Treasury said.

“Electricity regulations were amended to enable municipalities to procure power from IPPs.

“By the end January 2021, over 430,000 jobs of varying duration had been supported through the stimulus and an additional 180,000 jobs are in the recruitment process.”

Majority of vaccines coming later in the year 

In a separate presentation to parliament on Thursday afternoon, health minister Dr Zweli Mkhize said that his department originally estimated that at least 40 million people will need to receive a vaccine to ensure population immunity.

However, he indicated that it is increasingly likely that more people than this will need to receive a shot.

He indicated that talks were still ongoing with vaccine producers, including Johnson & Johnson and Pfizer, and that final figures would be announced soon.

The country will have access to 500,000 doses from Johnson & Johnson within ‘the next few weeks’, with a further 600,000 doses being delivered by Pfizer, he said.

The majority of the country’s vaccines are only expected to arrive in April, May and June.

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