Economy: SA has to do much better
SA's growth of 1.2% in 4Q 2021 has yielded an overall positive 4.9% GDP growth in 2021, which is a welcome rebound in the economy after the devastating -6.4% growth in 2020. Half the sectors in the economy, especially mining and agriculture, made positive contributions to economic recovery in the final quarter of the year.
Even though the economy is not yet back to pre-pandemic levels, the 4.9% growth in 2021 nonetheless makes up for much lost economic ground and contributes to a further normalisation of economic and business activities in SA.
However, the bulk of the momentum driving the economic rebound is now inevitably behind us. The forecasts for GDP growth over the next couple of years now remain modest – with the recent Budget expecting growth to average only 1.8% over the next three years. SA has to do much better if it wants to reduce unemployment and ensure fiscal sustainability in the years ahead.
To make tangible progress on both the employment and tax revenue fronts SA therefore needs to progressively aim for 4%-5% GDP growth and do what is urgently necessary to achieve it through greater collaboration with the private sector. SA must rely now on new and updated economic factors, not on a 'once-off' rebound, if it wants to maximise the number of jobs created at any given growth rate.
It therefore remains essential to now get the SA economy on a higher growth trajectory by urgently capitalising on the positive commitments made in the SONA and the Budget to mobilize the private sector on a bigger scale and create the necessary climate to do so.
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