As the country begins to roll out a massive vaccination programme, the Gross Domestic Product (GDP) is projected to grow by a rate of 3.3% in 2021.<\/p>\n
Releasing the Budget Review for the next three years, the National Treasury said on Wednesday the Covid-19 shock is estimated to have led to a 7.2% contraction in GDP growth in 2020.<\/p>\n
\u201cThe economy has started to recover in response to improved global conditions and the easing of lockdown restrictions and in the months ahead, a mass vaccine rollout will support a full reopening of the economy.<\/p>\n
\u201cGDP growth of 3.3% is projected for 2021, moderating to an average of 1.9% in 2022 and 2023.\u201d<\/p>\n
Treasury said government\u2019s balanced and prudent fiscal strategy is designed to stabilise the public finances.<\/p>\n
\u201cThe 2021 Budget provides continued support to the economy and public health in the short term without adding to long-term spending pressures. Capital spending is the fastest-growing component of non-interest spending.\u201d<\/p>\n
The department said the outlook remains highly uncertain and the economic effects of the pandemic are far-reaching.<\/p>\n
By the third quarter of 2020, there were 1.7 million fewer jobs than in the same period in 2019.<\/p>\n
\u201cRising unemployment and income losses have entrenched existing inequalities. GDP is only expected to recover to pre-pandemic levels in late 2023. Given South Africa\u2019s structural constraints, its recovery will be slower than many of its developing-country peers,\u201d said Treasury.<\/p>\n
Alongside a robust public health response to the pandemic and immediate support to households and businesses, the National Treasury said government\u2019s recovery plan focuses on raising the economy\u2019s long-term growth rate.<\/p>\n
\u201cStructural reforms will lower barriers to faster, inclusive growth by improving access to reliable electricity, water and sanitation services; enabling cost-effective digital services; promoting the green economy; and supporting industries with high employment potential, such as tourism and agriculture.<\/p>\n
\u201cGiven these circumstances, the 2021 Budget strikes a difficult balance between providing immediate support for the economy and shoring up the country\u2019s public finances.\u201d<\/p>\n
Treasury said over the next three years, the fiscal policy will focus on:<\/p>\n