Looking Back At 2021 – COVID Persisted, Unrest In July; But A Silver Lining Emerges

The year 2021 was met with cautious optimism. After the year 2020 led the world into a global pandemic for the first time in a century, a global pandemic which according to the?World Health Organisation (WHO)?had infected over 82 million people and killed more than 1.8 million worldwide, infected 1 057?161 people and claimed 28?469 lives in South Africa alone, by the 31st?December 2020, according to the National Institute for Communicable Diseases (NICD); we all were hoping that 2021 would provide a reprieve.

With the hope and the promise of vaccines under development, the world, along with us here in South Africa, hoped to shake off the cobwebs of the economic slowdown the pandemic had caused in 2020. After all, the global economy had been severely and negatively impacted, with the IMF estimating that the global economy shrunk by 4.4% in 2020. The organisation described the decline as the worst since the Great Depression of the 1930s, as reported by the?BBC.

Domestically, South Africa bore the brunt of the economic seizure.?According to a 25th?June 2021 article in?Borgen Magazine,?“The COVID-19 pandemic has brought South Africa to the brink of a serious social and economic crisis. In a country where about 18% of the population already lives under the poverty line, the extent to which COVID-19 has exacerbated the poverty crisis is still unfolding.”

Worryingly, prior to the pandemic, the South African economy, often described as the most unequal in the world, was under severe pressure. According to an article published by?Accord?in March 2021:?“Prior to the onslaught of COVID-19, South Africa had slid into a technical recession by the end of 2019… By the start of 2020, the South African economy was experiencing some of its worst structural economic constraints:

• Formal unemployment reached 29%
• Youth unemployment was the biggest concern, estimated at 53.18% with those younger than 25 years old comprising a rate of 58%
• Major credit rating agencies like Fitch and Standard and Poor downgraded South Africa’s sovereign debt from stable to negative”

As predicted, the pandemic has worsened the situation, with International News Agency?Reuters?reporting that:?“South Africa’s unemployment rate hit a new record high of 34.4% in the second quarter of 2021 from 32.6% in the first quarter…

Statistics South Africa said the number of unemployed totalled 7.826 million people in the three months to the end of June, compared with 7.242 million people in the previous three months.

The rate was the highest since the quarterly labour force survey began in 2008.”

So within this context, we collectively had much to do to reverse the losses we suffered during 2020.

Has 2021 lived up to this need?

The South African Reserve Bank, in its latest?Full Quarterly Bulletin – No 301 – September 2021, published on the 28th?September 2021, gives us a silver lining to the dark cloud that covers our economy:?“Real economic activity in South Africa expanded for a fourth consecutive quarter in the second quarter of 2021. Growth in real gross domestic product (GDP) accelerated marginally from a revised 1.0% (4.2% annualised) in the first quarter of 2021 to 1.2% (4.7% annualised) in the second quarter, despite the third wave of coronavirus disease 2019 (COVID-19) infections.”

Statistics South Africa (Stats SA)?expands on this positive news. Stats SA reports that the economy has seen consistent growth since the lockdown of March 2020, which resulted in a halting of economic growth in South Africa, but not enough to return to pre-COVID-19 levels. Real GDP was R1 131 billion in the second quarter of 2021.

Stats SA goes on to report that:?“Six of the ten industries recorded a rise in production in the second quarter of 2021. The transport & communication, personal services and trade industries were the most significant drivers of growth in the second quarter, with transport & communication and agriculture recording the highest growth rates.”

It is clear that we are, by far, not out of the woods yet, with the pandemic persisting and the shocking and disturbing July unrest which affected South Africa’s two most populous provinces, being Kwa-Zulu Natal and Gauteng. The rioting that erupted in parts of South Africa in July 2021 caused damage worth $1.7 billion (25 billion rand), according to the state insurance company handling the claims. More than 300 people died and more than 200 shopping centres were looted in the Kwa-Zulu Natal and Gauteng provinces when rioters ransacked shops, according to international news service,?Reuters.

Despite these challenges that threatened to cripple South Africa further, we are still poised for an economic recovery. Of course South Africa is not an island unto itself and global sentiment needs to shift in the positive globally as well.

According to?McKinsey and Company: “In a change from the first three quarters in 2021, uncertainty over COVID-19 is no longer a foremost economic concern to executives, according to the latest McKinsey Global Survey.”

Instead, new concerns, as it pertains to economic growth, have emerged for executives according to the McKinsey Global Survey:?“When asked about threats to growth in their countries’ economies, executives now cite mounting fallout on the supply chain—which is also the most common risk to company growth—and inflation more often than the pandemic itself.”

Inflation aside, supply chain shortages, pose an opportunity for small to medium enterprises to emerge and fill this commercial void. With quality products, efficient delivery and competitive pricing, South African businesses can poise themselves to provide the solution to the next great economic obstacle.

Thus we were correct to approach this year with optimistic caution, however, this year, through vaccination developments and rollouts, has seen the word adapting to COVID-19. Economies have been reignited, including here and abroad with new opportunities awaiting.

As the world adapts to the pandemic with more people being vaccinated globally, a natural national treasure we are lucky to possess here in South Africa, is poised to receive international and local guests alike. With the biodiverse, beautiful environment we have, which includes the big five as well as other magnificent fauna and wild flora, we should use this as an opportunity to fully tap into our biodiversity economy. Our biodiversity, augmented by privately owned properties that give people access to the wild, are self-renewing natural resource which our hospitality enhances.

The question is, will we be able to build on the foundation of 2021 and return our economy to what it was prior to COVID-19 and exceed it?