While economic analysts expect global economic growth to rebound to about 5% this year, several uncertainties depend heavily on how quickly Covid-19 vaccine programmes can be rolled out in each country.
The Bureau for Economic Research (BER) said South Africa’s increased economic activity remains uncertain because of the country’s lack of coherent Covid-19 strategy.
Senior economist at BER Lisette IJssel de Schepper said South Africa’s failure to timeously secure a bulk supply of vaccines suggests that the country runs the risk of not fully participating in the widely expected vaccine-induced global growth acceleration later in the year.
“There is a risk that investors will start to distinguish between those emerging markets that are rolling out mass inoculation programmes and those that are lagging behind,” said De Schepper, adding that South Africa fared comparatively worse than other emerging economies and developed economies.
Israel is leading the pack with more than 15% of the population already vaccinated.
At about 2% of the population, the UK and the US lead the vaccination drive in major economies, said De Schepper.
Health Minister Zweli Mkhize said South Africa would receive 1 million doses of vaccinations in January and 500 000 doses in February to cover the country’s 1.25 million front line healthcare workers.
This is referred to as phase 1 of the vaccine roll-out. At the time, Mkhize said regulatory impediments to the roll-out were being cleared as South Africa quickened its vaccine strategy, which was vital to economic recovery.
According to Investec, the rapid roll-out of phases 1, 2 and 3 was “absolutely key to eliminating the economic harm lockdowns bring to a country”.
“Phase 2 will be vital to support economic recovery, just as phase 1 is vital for healthcare. Many countries around the world have started to vaccinate their populations, or plan to do so in the first quarter of this year, and the actual arrival and start of the vaccination programme in South Africa is a building block necessary for the country to ultimately work down its high unemployment figures,” said Investec.
De Schepper said the South African government was targeting the vaccination of 67% of the population by the end of 2021.
“While we wait for news on bilateral deals agreed with vaccine manufacturers, at this stage, government’s vaccination target is aspirational,” she said.
“Given the latest Covid-19 stats in South Africa, the current adjusted level 3 lockdown restrictions could be extended beyond February. Throw the persistent risk of load shedding into the mix and there are numerous downside risks to our current forecast of 3.5% real GDP growth for 2021,” said De Schepper.
She added that countries that find themselves at the back of the queue for vaccines face an almost inevitable damaging third, and potentially fourth, wave of the virus.
In March 2020, South Africa introduced a drastic lockdown which aggravated the country’s existing economic woes.
Before the pandemic, South Africa was already in the midst of a recession and had a high unemployment rate, low business confidence, service delivery problems, junk status and corruption.
According to North West University Business School Professor Raymond Parsons, the economic devastation showed up vividly in high-frequency data and in very negative growth and employment trends as 2020 progressed.
The existing faultlines of unemployment, poverty and inequality in the country were, therefore, simply reinforced by the subsequent developments triggered by Covid-19, he says.
Parsons said South Africa’s ability to move beyond Covid-19 depended on how soon vaccines would become generally available.
The country’s access to one or more of the vaccines should be expedited and a blueprint prepared for their distribution once they became available in this country.
In a comment piece published on the university website, Parsons said the uncertainty around the arrival of vaccines in South Africa must be addressed and that proper timelines for the delivery of vaccines would build confidence.
“It is clear that, in the face of the recent renewed surges in the pandemic, Covid-19 exit strategies are, more than ever, a complex process of balancing trade-offs, handling fears and maintaining trust is all on the basis of shifting evidence and imperfect information, but with profound economic implications,” said Parsons.