The World Bank has published its Global Economic Prospects report, detailing how the Covid-19 pandemic has impacted the growth prospects of South Africa and other countries heading into 2021.
One of the key findings of the report is how the pandemic has impacted per capita income, with many countries are expected to lose a decade or more of per capita income gains.
Per capita income is a measure of the amount of money earned per person in a nation or geographic region. The measurement can be used to determine the average per-person income for an area and to evaluate the standard of living and quality of life of the population.
The report shows that the pandemic caused an estimated 6.1% fall in per capita income last year across Sub-Saharan Africa. This is expected to lead to a further 0.2% decline in 2021, before firming somewhat in 2022.
“The resultant decline in per capita income is expected to set average living standards back by a decade or more in a quarter of Sub-Saharan African economies, with even more severe setbacks in Nigeria and South Africa – home to one-quarter of the region’s population.
“In all, this reversal is projected to push tens of million more people in the region into extreme poverty cumulatively in 2020 and 2021.”
In South Africa, growth is expected to rebound to 3.3% in 2021 – 0.7 percentage point below previous forecasts – before softening to a near potential pace of 1.7% in 2022.
“Weaker growth momentum into 2021 partly reflects the lingering impact of the pandemic, as some mitigation measures are envisioned to remain in place,” it said.
“Pre-existing structural constraints, such as persistent power-supply disruptions, are expected to become binding again as economic activity firms. Debt sustainability concerns may require fiscal consolidation, which, if prematurely implemented, is likely to further soften the recovery.”
With economic activity in South Africa already on a weak footing before the pandemic hit, output is expected to have fallen 7.8% last year.
The country suffered the most severe Covid-19 outbreak in Sub-Saharan Africa, which prompted strict lockdown measures and brought the economy to a standstill.
However, sizable and decisive monetary and fiscal policy support— which included measures to strengthen health sectors, emergency food distribution, tax relief, and loan guarantees—likely prevented an even deeper downturn.