The World Economic Forum (WEF) has published its global risks report, detailing some of the key risks facing South Africa over the coming years.
The forum said that Covid-19 and its economic and societal consequences continue to pose a critical threat to the world at the start of 2022.
“Vaccine inequality and a resultant uneven economic recovery risk compounding social fractures and geopolitical tensions. In the poorest 52 countries – home to 20% of the world’s people – only 6% of the population had been vaccinated at the time of writing.
“By 2024, developing economies (excluding China) will have fallen 5.5% below their pre-pandemic expected GDP growth, while advanced economies will have surpassed it by 0.9%—widening the global income gap.”
The WEF said this resulting global divergence will create tensions— within and across borders—that risk worsening the pandemic’s cascading impacts and complicating the coordination needed to tackle common challenges including strengthening climate action, enhancing digital safety, restoring livelihoods and societal cohesion and managing competition in space.
As part of its report, the forum detailed the top five risks for each of the 124 economies surveyed by the World Economic Forum’s Executive Opinion Survey (EOS) between May and September 2021.
Over 12,000 leaders answered the following question: ‘What five risks will pose a critical threat to your country in the next two years?’ and were asked to select these from a list of 35 risks, with no particular order.
According to the findings, the five biggest risks facing South Africa include:
- Prolonged economic stagnation;
- Employment and livelihood crises;
- State collapse;
- Failure of public infrastructure;
- The proliferation of illicit economic activity.
South Africa was also identified as one of 31 countries, including Argentina, France, Germany and Mexico, with high risks around the ‘erosion of social cohesion’.
Social cohesion erosion is the risk that has worsened the most globally since the start of the Covid-19 crisis, according to the WEF. It is perceived as a critical threat to the world across all time spans – short, medium and long term – and is seen as among the most potentially damaging for the next 10 years.
“In 31 out of the 124 countries surveyed in the EOS – including Argentina, France, Germany, Mexico and South Africa among the G20 – social cohesion erosion was seen as a top-10 short-term threat to their countries.
“Inequality – economic, political, technological and intergenerational – was already challenging societies even before income disparities increased through the pandemic.”
These disparities are now expected to widen further: research by the World Bank estimates that the wealthiest 20% of the world’s population will have recovered half their losses in 2021, while the poorest 20% will have lost 5% more of their income.
A separate report published by the World Bank shows that South Africa’s GDP growth is also expected to slow to 2.1% in 2022, amid decelerating global and regional growth.
The group estimates that South Africa’s economy grew by 4.6% in 2021, after contracting by 6.4% in 2020, reflecting a strong rebound in mining, manufacturing, and services sectors. The recovery slowed in the second half of 2021 owing to severe Covid-19 outbreaks, power outages, and a rise in social unrest.
Despite this rebound, the pandemic has reversed at least a decade of gains in per capita income in some countries—in almost a third of the region’s economies, including Angola, Nigeria, and South Africa, per capita incomes are forecast to be lower in 2022 than a decade ago, the World Bank said.
Growth in South Africa is forecast to revert to its pre-pandemic trend, with the economy projected to grow by 2.1% in 2022 and 1.5% in 2023.
“Many constraints on long-term growth in South Africa predate Covid-19, including the legacy of weak public finances and slow implementation of reforms needed to boost productivity and employment growth.
“Rising government debt and debt service costs will continue to constrain policy space and curtail public spending, leaving gaps in essential public services and infrastructure as a major obstacle to stronger potential growth.”