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.<\/p>\n
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.<\/p>\n
Per capita income is a measure of the amount of money earned per person in a nation or geographic region. The measurement\u00a0can be used to determine the\u00a0average per-person\u00a0income\u00a0for an area and to evaluate the standard of living and quality of life of the population.<\/p>\n
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.<\/p>\n
“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\u2019s population.<\/p>\n
“In all, this reversal is projected to push tens of million more people in the region into extreme poverty cumulatively in 2020 and 2021.”<\/p>\n
Growth prospects<\/strong><\/p>\n 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.<\/p>\n “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.<\/p>\n “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.”<\/p>\n 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.<\/p>\n 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.<\/p>\n However, sizable and decisive monetary and fiscal policy support\u2014 which included measures to strengthen health sectors, emergency food distribution, tax relief, and loan guarantees\u2014likely prevented an even deeper downturn.<\/p>\n
\n