Investec: How Omicron impacts SA’s economic outlook

South Africa is facing a challenging economic environment globally and domestically, with concerns over the sustainability of manufacturing growth amidst the Omicron variant. Annabelle Tims, an economist, anticipates a GDP growth of only 0.5% in the fourth quarter, citing the potential impact of Omicron and recent load shedding. The third quarter GDP numbers, set to be released next week, are expected to show mixed results across manufacturing, mining, and retail sectors. Tims believes that the economy may struggle to recover to pre-pandemic levels, with 2022 growth forecasts revised downwards to below 2%. The consumer condition remains a point of concern, with high levels of indebtedness and a slow recovery pace. A shift towards mandatory vaccination could be pivotal in restoring economic confidence, although the debate remains heated. Tims forecasts a range-bound South African rand, with seasonal strength expected in the fourth quarter. Despite economic challenges, Tims sees some growth drivers in retail sales and potential reforms in 2022, dependent on global economic factors and local confidence levels.