The World Bank is forecasting that growth in South Africa will slow to only 2.1% in 2022 amid decelerating global and regional growth, reflective of continued Covid-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks.

The bank’s latest ‘Global Economic Prospects’ report, released on January 11, estimates that South Africa grew by 4.6% in 2021, after contracting by 6.4% in 2020.

“In South Africa, a strong rebound earlier in the year was disrupted by severe Covid-19 outbreaks, social unrest, and power shortages,” the report notes.

It also forecasts that the country is likely to expand by only 1.5% in 2023 and warns that risks to the outlook are tilted to the downside.

“Growth in South Africa is forecast to moderate to its pre-pandemic trend, being held back by structural impediments and elevated levels of public debt,” the report adds.

Global growth is also expected to decelerate markedly from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.

“Following a strong rebound in 2021, the global economy is entering a pronounced slowdown amid fresh threats from Covid-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies,” the report cautions.

Output in sub-Saharan Africa (SSA), meanwhile, grew by an estimated 3.5% in 2021, driven by a rebound in commodity prices and an easing of social restrictions.

However, the report warns that the recovery remains fragile and insufficient to reverse a pandemic-induced increase in poverty.

Growth in SSA is projected to firm slightly during the forecast horizon, to 3.6% in 2022 and 3.8% in 2023.

“This outlook is nearly a full percentage point below the 2000 to 2019 average, however, reflecting the continued effects of the pandemic, reduced policy support, and policy uncertainty and worsening security situations in some countries.”

In over a third of the region's economies, including Angola, Nigeria and South Africa, per capita incomes are projected to remain lower in 2022 than a decade ago.

The bank also warns that very low Covid-19 vaccination rates in the region pose a threat of renewed and more severe outbreaks, which could trigger recurrent disruption to activity.

“A prolonged pandemic could amplify past development and health challenges, derail structural and fiscal reforms, and result in lasting human capital losses.”