Healthcare workers carry the vicious Pfizer vaccine to elderly people at Bertha Gxowa Hospital in Germiston on May 17, 2021.
Michele Spatari | AFP | Getty Images
South Africa’s economic activity has recovered faster than expected in recent months and the rand is the most efficient emerging market currency this year. But the country is competing to launch a third wave of the Covid-19 vaccine.
In a financial stability review on Thursday, South Africa’s central bank said the economy had continued to recover from the 2020 recession, which led to a 7 percent drop in gross domestic product contracts, the biggest drop in more than a year. century
“The release of positive information, an increase in global economic activity, strong international trade, higher commodity prices and improved mobility” prompted NKC African Economics to raise its first-quarter GDP forecast as an expansion. Quarterly 1.4%, up from a previous forecast of 3.3% contraction, NKC analysts now expect GDP growth of 3.1% in 2021.
Industry sectors, particularly mining and manufacturing, have shown positive growth thanks to rising global demand and high commodity prices.
“Google Mobility data, which has proven to be a better indicator of economic activity, to the best level since the coronavirus shock,” NKC senior economist Pieter du Preez said in a note on Wednesday.
Third wave risks
The major ratings agencies have confirmed their rankings for South Africa over the past week. But Fitch noted that although the fiscal accounts were amazed by the upside in both the fourth quarter of 2020 and the first quarter of 2021, the country still faces. “The risks that are important to Debt stabilization “
The S&P also highlighted structural complaints, a lack of economic reforms and a stagnant push for vaccination as it hinders medium-term growth potential.
Despite the positive surprises at this time, the SARB warns that the trend still depends on the timing of the vaccine release and the possible virus recovery, suggesting an epidemic could be in 2022.
To date, the country has reported more than 1.6 million cases of COVID and more than 56,000 deaths, according to data compiled by Johns Hopkins University.
South Africa’s seven-day median daily mean is now up from about 780 in early April to more than 3,700 late last week.
Given the magnitude of the previous impact on economic activity, it appears that the government is reluctant to revise tough virus restrictions, even though President Cyril Ramaphosa met with the coronavirus team. Of the country this week to discuss possible strategies
South African President Cyril Ramafosa visits the Coronavirus Treatment Facility (COVID-19) at NASREC Expo Center in Johannesburg, South Africa, April 24, 2020.
Jerome Delayed | Reuters
South Africa has started pursuing its goal of vaccinating 5 million seniors by the end of June and 67% of the 60 million people by February. This country has bought the vaccination. 30 million doses of Pfizer-BioNTech and 31 million doses of Johnson & Johnson vaccine orders, both of which have proven to be comparable to important variables circulating in the country.
The central bank also noted the risks posed by the sudden change in global financial conditions and “Consistently high and rising public debt” in South Africa
Du Preez of the NKC said the impending third wave of Covid-19 will hinder the economic recovery process. At the same time, the government was engaged in lengthy negotiations with trade unions over a commitment to freeze government wages, which Dupreez said was also negative for the economic outlook.
“The National Treasury may be forced to prioritize spending or overspend on massive fiscal deficits,” he said.
“The new expenditure priorities will lead to a reduction in funding for critical sectors in the economy or a significant reduction in infrastructure upgrades.”
The Ministry of Finance therefore found himself “It’s between a rock and a tough place,” Dupree added, as overspending may signal the authorities are not serious about fiscal inclusion.
Any signs of a fading commitment to drive this austerity will put pressure on the Rand, Capital Economics Senior Economist Jason Tuvey said in a recent note.
The rand soared on higher metal prices and traded around $ 13.76 on Monday morning.
However, capital economics analysts said in a note on Thursday. “The performance of the rand is unlikely to last long as we expect most commodity prices to drop and US long-term yields will begin to rise again, putting further pressure on EM.” Currency times “
“In addition, we think the SARB will not be policy-intensive as now, investors cut prices and concerns about South Africa’s fiscal situation will eventually emerge.”
Capital Economics expects the rand to weaken to $ 15.5 by the end of the year.