Harare – The SADC economy contracted by 4,8 percent in 2020 from growth of 2,1 percent the previous year, a recent report by the bloc’s Secretariat shows.
The world entered an economic recession last year as the COVID-19 pandemic took its toll. In Southern Africa, matters were compounded by the impact of natural disasters in prior years.
The region forecasts growth of 4,2 percent in 2021 and 3,2 percent in 2022, largely hinged on vaccine rollouts which will allow for opening up of economies. Improved agricultural performance will also contribute to growth this year.
The SADC report also shows that the region’s annual inflation increased to an average of 49,6 percent in 2020 from 16,4 per cent in 2019, largely due to heightened inflationary pressures in Zimbabwe. The average inflation excluding Zimbabwe averaged 6.4 percent in 2020.
“(The) fiscal deficit deteriorated from three percent of GDP in 2019 to 7,3 percent of GDP in 2020. Public debt increased from 56,3 percent of GDP in 2019 to 67,1 percent of GDP in 2020. The region’s current account balance as a ratio of GDP widened from an average deficit of 4,2 percent in 2019 to a deficit averaging 4,7 percent in 2020,” reads part of the report.
On the up side, SADC’s international reserves increased to 5,9 months of import cover in 2020 up from 5,3 month in 2019.
“National savings, annual total investments and gross national savings remained subdued in 2020, with most member states below the regional targets. After a decline from 26,2 percent of GDP in 2015 to 23,5 percent of GDP in 2016, total investments (had) been on a steady increase up to 2020.
“The region recorded a marginal increase in total investments to 24,9 percent of GDP in 2020 from 23,7 percent of GDP in 2019. Only five member states (Botswana, Mozambique, Seychelles, United Republic of Tanzania and Zambia) recorded investments above the regional target of at least 30 percent of GDP.
“On the savings side, gross national savings remained below 20 percent of GDP at 15 percent of GDP in 2020 from 16,3 percent of GDP in 2019. Only Zambia has recorded total gross national savings above the regional target of 35 percent of GDP,” the report reads.
The average inflation is expected to ease to 15,4 percent in 2021 on the back of significant disinflation in Zimbabwe. However, inflation is expected to be above the regional benchmark in Angola, DRC, Malawi, Zambia and Zimbabwe.
“The debt burden is expected to worsen for SADC member states with public debt forecast to further increase to 66,2 percent of GDP in 2021. Member states’ expenditure continued on an upward trend as Member States invested heavily in the public health system to mitigate human and economic impact of the coronavirus. This will result in a mismatch of expenditures and revenues which will further widen the fiscal deficit and worsen Member States’ debt position.
“Only six Member States (Botswana, DRC, Eswatini, Madagascar, Malawi and Tanzania) are projected to achieve the 60 percent of GDP regional set target for the public debt in 2021.”