The Gross Domestic Product (GDP) for 2021 is expected to increase. The National Treasury has projected the growth rate to be 3.3%.
Finance Minister, Tito Mboweni said Covid-19 has led the GDP to shrink by 7.2%.
“The economy has started to recover in response to improved global conditions and the easing of lockdown restrictions and in the months ahead, a mass vaccine rollout will support a full reopening of the economy.
“GDP growth of 3.3 percent is projected for 2021, moderating to an average of 1.9 percent in 2022 and 2023.”
However, the department has said the overall future of the economy remains uncertain economy remains uncertain.
There were 1.7 million fewer jobs in the third quarter of 2020, than in the same period in 2019.
“Rising unemployment and income losses have entrenched existing inequalities. GDP is only expected to recover to pre-pandemic levels in late 2023. Given South Africa’s structural constraints, its recovery will be slower than many of its developing-country peers,” said Treasury.
The National Treasury said it has committed itself to focusing on improving the economy's long-term growth rate.
“Structural reforms will lower barriers to faster, inclusive growth by improving access to reliable electricity, water and sanitation services; enabling cost-effective digital services; promoting the green economy; and supporting industries with high employment potential, such as tourism and agriculture.
“Given these circumstances, the 2021 Budget strikes a difficult balance between providing immediate support for the economy and shoring up the country’s public finances.”
Over the next three years, the fiscal policy will focus on:
- Giving extended support to Covid-19 response
- Stabilising the country's debt
- Improving the composition of expenditure