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South Africa’s economic recovery plan uncertain: Analysts

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Analysts have warned that there’s high uncertainty on the country’s economic recovery path and government revenue collection. The view emerged during the virtual Moody’s Emerging markets summit.

The event discussed trends on whether emerging markets are leading or lagging the global economic recovery.

Moody’s analysts say economic recovery will be uneven across emerging market economies.

It’s been a year and a half since the pandemic hit and many emerging markets are still dealing with very high infection rates and limited vaccine availability.

Some economies are slowly recovering, but it’s expected recovery will be uneven across different countries and economic sectors.

 

Economies dependent on tourism are expected to remain vulnerable for another two years, while the rebound in the oil price and other commodity prices will support commodity-exporting countries.

Amongst the BRICS (Brazil, Russia, India, China, and South Africa) countries, China is leading the way in terms of recovery, followed by India, despite its current wave of COVID infections, while, South Africa, Brazil and Russia are struggling to recover to return to pre-pandemic levels.

President of the United Nations Sustainable Development Solutions Network, Jeffrey Sachs, says the road to recovery will be shaped by public policy.

He says if there are well-coordinated global policies, then the world will see countries emerge from the pandemic with less damage and investment-led growth in the coming years.

Sachs says without international coordination, there will be an uneven and tense divide in the world.

Emerging markets are also worried about rising inflation, especially in the United States and the possible hike in interest rates.

This would present a risk for capital flow reversal and financial turbulence for emerging markets.

 

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