Harare – The region’s top performing economies – South Africa, Angola, Botswana and Mozambique – are expected to rebound strongly in 2021 following a pandemic-induced depression last year, an international credit rating agency says.
In its new April 2021 Southern Africa Outlook, US-based financial services firm Fitch Solutions forecasts South Africa to lead the economic recovery because of its strong response policies and its improving credit ratings.
“South African policymaking over the coming quarters will focus on the need to revitalise the economy following the severe recession in 2020. We expect South Africa’s real GDP to expand by 2,3 percent in 2021, after an estimated contraction of eight percent in 2020… Strengthening global demand should support South Africa’s key export sectors, including tourism, while the gradual rollout of a COVID-19 vaccine in South Africa should provide tailwinds to private consumption and business investment,” Fitch said.
The agency forecast Angola’s economy to rebound in 2021, with GDP expected to grow 1,7 percent, spurred by oil and gas exports.
“Inflationary pressures will begin to ease. We forecast that inflation will slow from an average of 22,2 percent in 2020 to 18 percent in 2021. We expect that the kwanza will depreciate more moderately compared to 2020, given the anticipated increase in oil exports, improving terms of trade and rising global risk appetite supporting demand for emerging market currencies.”
Fitch reports that although the Botswana pula is set to further decrease in value against the US dollar, Chinese renminbi and the euro, there were positive developments in terms of GDP growth. The pula will significantly appreciate against the South African rand and appreciating global diamond prices will grow GDP by 5.4 percent this year.
And despite armed conflict, Fitch sees Mozambique’s economy rebounding.
“We expect that a recovery in global growth from an estimated contraction of 3,8 percent in 2020 to 5,6 percent growth in 2021 will increase demand for Mozambique’s goods exports,” Fitch said.