The World Bank has revised South Africa’s 2021 growth outlook upwards by 0.2 percentage points as the continuing commodity supercycle is expected to benefit from the strong growth and demand in China.
THE WORLD Bank has revised South Africa’s 2021 growth outlook upwards by 0.2 percentage points as the continuing commodity supercycle is expected to benefit from the strong growth and demand in China.
In its June Global Economic Prospects report released yesterday, the World Bank said South Africa’s gross domestic product (GDP) would rise from a forecasted 3.3 percent to 3.5 percent.
The World Bank’s forecast comes as Statistics South Africa revealed yesterday that the economy failed to expand at a quicker pace in the first three months of this year. Headline GDP in South Africa rose by 1.1 percent in the first quarter of 2021, translating into an annualised growth rate 4.6 percent.
Investec’s chief economist Annabel Bishop said the lift in GDP could raise the overall 2021 GDP outcome to 5 percent, if not above.
“Today’s GDP outcome shows particularly strong growth surprised on the upside, and could lead to growth for 2021 of around 5 percent if load shedding does not worsen,” Bishop said.
“South Africa has seen key gains in GDP’s mining sector in the first quarter on the strong commodity prices, along with low interest rates and building materials.”
Commodity prices have seen a sharp rise this year, many well above their pre-pandemic levels, owing to the improving global outlook as well as commodity-specific supply factors. The forecast for metals prices has been revised sharply upwards, and prices are now expected to be 36 percent higher on average relative to last year.
In sub-Saharan Africa, the World Bank said regional activity was expected to expand a modest 2.8 percent in 2021 and 3.3 percent next year.
The bank said global output growth was projected to strengthen to 5.6 percent in 2021, its strongest post-recession pace in 80 years. The bank said the recovery was underpinned by steady but highly uneven global vaccination and the associated gradual relaxation of pandemic-control measures in many countries, as well as rising confidence.
The recovery is envisioned to continue into 2022, with global growth moderating to 4.3 percent though remaining 1.8percent below pre-pandemic projections. Among major economies, US growth is projected to reach 6.8 percent this year, while China’s growth represents an upward revision of 0.6 percentage point, largely owing to expectations of stronger foreign demand.