South Africa’s economic growth forecast of 5.1% for 2021 is at risk after more than 90 nations imposed travel bans on the country right before its summer holiday season because of the discovery of the coronavirus omicron variant.
The economy grew 5.8% in the nine months through September, data published by Statistics South Africa on Tuesday shows. While that placed the nation on track to exceed the government’s growth forecast of 5.1% for 2021 and the central bank’s 5.2%, the travel bans and the emergence of the new Covid-19 strain will likely temper the recovery as spending on tourism drops.
PwC estimates the bans could cost the country as much as R6.5 billion ($406 million) in potential foreign revenue, placing pressure on growth in the fourth quarter. It also expects household spending to be squeezed by surging gasoline prices and rising interest rates, while fading base effects are also projected to weigh on the data in the last three months of the year.
That could “pull down the full-year average to below 5%,” said Christie Viljoen, a Cape Town-based economist at PwC.
Nedbank’s economic unit revised its economic-growth forecast lower to 4.8% from 5.1%, while Carmen Nel, an economist and macroeconomic strategist at Matrix Fund Managers, expects analysts to downgrade their GDP expectations to about 4.5% from 5%.