Covid-19 had a big impact on almost every country’s economy. South Africa isn’t an exception. After the serious damage to the state’s economy, the country started to rebound.
In 2020, South Africa’s economy fell for the first time in 11 years as coronavirus lockdowns impeded commerce and output.
According to a study issued by Statistics South Africa, the country’s GDP fell by 7% in 2018, compared to a 0.2 percent increase in 2019.
It is the economy’s first yearly decline since 2009 when it dipped 1.5 percent.
However, the fourth-quarter increase was better than projected, with GDP increasing by 1.5 percent. The industrial and commercial sectors are primarily responsible for the rise between October and December.
The health crises, as well as the restricting measures, have had a significant impact on Africa’s second-largest economy. At the end of 2020 March, the country started to impose one of the strictest lockdowns, in order to prevent the spreading of Coronavirus. However, that decision made the country deteriorate the state’s economic condition.
Moreover, the country’s one of the most important sectors in terms of economic growth – tourism started to decrease. It won’t be a surprise if we say that this kind of condition had a huge negative impact on the country’s economy.
Apart from that, it should be said that after the second wave of Covid-19 the country’s tourism sector started to rebound. The main reason behind this was the start of the vaccination process. These processes made the country’s government the decision to cancel the lockdown. For this reason, many tourists started traveling to South Africa, the demand for the South African currency rand increased significantly, which played a crucial role in the rebounding of the country’s economy. It should be said that South African economic growth has recovered faster than predicted in previous months and weeks, and the rand has been the best-performing emerging market currency this year, but the nation is rushing to distribute Covid-19 vaccinations as a third wave approaches.
The South African Reserve Bank stated in its Financial Stability Review that the economy was still recovering from a 2020 recession that saw GDP decrease by 7%, the biggest drop in almost a century.
Positive data announcements, an increase in the world economy, solid international commerce, higher commodities prices, and increased mobility have caused NKC African Economics to revise its first-quarter GDP prediction to a 1.4 percent quarterly gain, up from a 3.3 percent drop previously. According to NKC researchers, GDP will expand by 3.1 percent in 2021.
Because of increasing worldwide demand and grown commodity prices, the industry, notably mining and manufacturing, has shown favorable rates of growth.
Even though the country’s economy rebounds, South Africa is in the threat of starting the third wave of Coronavirus, which will have a dramatic effect on the country’s economy. However, it is worth noting that at this moment the country is more prepared for the virus and the effect most assuredly won’t be as crucial as it was in the case of the first lockdown.
Certain sectors of the economy, particularly tourism, which employs a big number of unemployed workers and women, have paid an unacceptably high price as a consequence of lockdowns and shutdowns.
The tourism sector has been equally impacted, running with around two-thirds of the income it had before the epidemic, with the first shutdown resulting in a 97 percent drop in hotel income.
The BER, which is also known as the Bureau for Economic Research, cautioned in a recent research paper that Covid-19 will arrive in waves and that the country will be hit many times in 2021.
As a result, nations at the back of the vaccination queue risk a virtually unavoidable destructive third, and perhaps fourth, wave of the virus.
Tivani Mashamba, a diagnostic research professor at the University of Pretoria, cautioned that perhaps the outbreak was only getting underway and that other waves of the virus may emerge as the times change.
The government has been chastised for moving slowly on Covid vaccinations while presenting an ambitious and unrealistic deployment goal. While it claims to have obtained 1.5 million doses for the near term and 20 million so far, concerns have been expressed regarding how many individuals will be immunized.
Opponents have also questioned the government’s ability to supervise the deployment without wrongdoing in the process.
Ramaphosa recognized that dishonesty had tarnished the early phases of the Covid-19 reaction, but stated that things will be better with the vaccination due to stricter controls.
The head of state stated that the government will be the primary purchaser of Covid-19 vaccinations for South Africa, with the private sector assisting with finance and delivery.
Economic activity increased in the third quarter as limitations were eased, despite a decrease in the number of contaminations. However, a second wave spurred by a new variety in December compelled the government to reintroduce some restrictions, which the economy appears to have resisted.
Analysts anticipate that the economy will improve more until the end of 2021. According to Raymond Parsons, professor at North-West University, the data indicates that a robust recovery is starting this year, with a projected rise of up to 5% for the end of 2021. South Africa, the continent’s worst impacted country, has officially reported more than 1.5 million Covid-19 cases, including more than 50,000 deaths, accounting for approximately half of all deaths associated with the coronavirus in Africa.