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South Africa's economic performance surprises on the upside
Absa Corporate and Investment Banking is hosting a virtual round table on the outlook on South Africa's economy for the second quarter of this year. The bank says recent macroeconomic performance has surprised to the upside, with strong activity indicators, subdued inflation, robust trade surpluses and much better-than-expected tax collections. Now with no sign of the anticipated third wave of Covid-19, the future picture of our economy may be changing. Peter Worthington, Senior Economist at Absa joins CNBC Africa for more.
Wed, 28 Apr 2021 11:11:11 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- South Africa's GDP outlook has been revised upwards for 2021, with strong growth momentum exceeding expectations.
- Key drivers of growth include sectors such as agriculture, mining, and export-oriented manufacturing, while challenges like unemployment and rising prices impact consumer spending.
- The impact of higher commodity prices, net exports, inventory rebuilding, and the gradual integration of the AFCFTA are expected to support South Africa's economy in the long term.
South Africa's economy has shown surprising strength in recent months, with positive macroeconomic indicators and robust growth projections. Peter Worthington, a senior economist at Absa, highlighted the country's better-than-expected performance in key areas such as activity indicators, subdued inflation, trade surpluses, and tax collections. The bank has revised its GDP outlook for the first quarter of 2021 to 1.7% and projects a growth rate of 1.0% for the second quarter. This momentum is expected to continue throughout the year, with a revised full-year forecast of 3.8% compared to the initial 3.1%. Worthington emphasized the importance of consumer spending and the challenges it faces due to factors like unemployment and rising prices. Despite these obstacles, sectors like agriculture, mining, and export-oriented manufacturing are driving growth. Additionally, net exports and inventory rebuilding are expected to support the economy. The impact of higher commodity prices is a significant contributor to South Africa's economic recovery, providing a nominal income stimulus that is likely to continue. Worthington also discussed the long-term potential of the African Continental Free Trade Area (AFCFTA) and its expected impact on the economy, highlighting the gradual nature of integration and the potential for firms to reorient towards African markets over time. Although the benefits of the AFCFTA will take time to materialize, it is expected to have a substantial impact in the future.
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