South African economy: Gradual, but rather slow recovery expected after the severe recession caused by Covid-19

The Covid-19 pandemic and measures to curb it lead to a dramatic slump in economic performance also in South Africa. The economic contraction will be especially pronounced in the current second quarter. This will also be noticeable on the job market. The South African economy is likely to recover and grow in the second half of the year; however, the decline in growth from the first half of the year will probably not be offset until 2022. Obviously, such forecasts are associated with a high degree of uncertainty. For instance, there is the risk of a second wave of the pandemic and global tensions could increase creating negative spillover effects for the South African economy.

I do not publish a precise economic forecast for the South African economy at the moment because of the very high uncertainties surrounding any assessment and forecast. For 2020, it may be reasonable at the moment to expect a negative growth rate in the range of minus 10 to minus 5 percent. In 2021, there will hopefully be a gradual recovery, which may be expected to result in positive growth rates ranging from 2 to 6 percent.

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