A promising start to South Africa’s economy in 2022 following a robust recovery in 2021, but risks have intensified

SOUTH AFRICA - Forecast 28 Apr 2022 by Iraj Abedian

• South African growth: South Africa’s economy underwent a robust recovery of 4.9% in real GDP during 2021 from 2020’s deep contraction of 6.4%. On top of growth coming from a low base as well as the recovering global economy acting as a tailwind, South Africa’s growth was also propelled by the significantly higher prices of the country’s export commodities. In 2022, risks to the growth outlook have intensified, but household expenditure remains robust and export commodity prices have once again improved. We forecast the South African economy to grow by 1.8% in 2022.

• Sovereign credit rating: Moody’s latest assessment of the country was slightly more positive, with the country’s improved fiscal outlook a major favorable factor.

• Agriculture, manufacturing and mining sectors: Agriculture continues to benefit from favorable weather conditions and higher agricultural commodity prices. Regarding manufacturing, not only did the PMI remain within the expansionary territory during Q1-2022, but it also increased throughout the quarter - this suggests continued recovery of the sector in the first quarter of 2022. South Africa’s mining sector is expected to continue to benefit from the resurgence in the country’s export commodity prices.

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