South Africa’s recovery from its deepest economic contraction in almost three decades risks stalling due to the fallout from a fourth wave of coronavirus infections driven by the Omicron variant.
Economists surveyed by Bloomberg predict GDP will expand 4.9% in 2021, compared to a previous estimate of 5.1%. The economy is now expected to grow by 2% next year and 2.1% in 2023.
The revisions come after more than 90 countries imposed travel bans on South Africa ahead of its summer holiday season following its discovery of Omicron and after output fell more than expected in the third quarter. Prior to the onset of the new strain, the government and central bank predicted the economy would grow by 5.1% and 5.2% respectively this year.
The evolution of the pandemic and ongoing electricity supply constraints remain risks to the outlook. Progress on some long-awaited structural reforms that finance minister Enoch Godongwana said the government is targeting by mid-February could bolster output from the new year. — Prinesha Naidoo and Sarina Yoo, (c) 2021 Bloomberg LP