South Africa should accelerate its coronavirus vaccination program and implement economic reforms to avoid further damage after virus restrictions brought business confidence to a 35-year low in 2020, according to a local trade group.
An index compiled by the South African Chamber of Commerce and Industry showed that average business confidence fell from 92.6 in 2019 to 86.5 last year, according to a statement emailed Wednesday.
This is the lowest annual number since 1985, when the United Nations Security Council asked members to introduce wider economic sanctions against South Africa for its apartheid policies.
The mood sinks
While the index rose to 94.5 in January from 94.3 in the previous month, “South Africa is in a fiscal jam,” making it imperative for the government to prioritize economic recovery while addressing the health risk posed by the pandemic Sacci said.
Data for December and January were released on Wednesday.
Africa’s most industrialized economy contracted probably the most in at least nine decades last year after lockdown measures halted some activity for months, causing shop closings and a surge in unemployment.
The country’s vaccination plans caught a snag this week after the launch of AstraZeneca Plc’s shots following a trial that showed efficacy against a new variant of the virus first identified in the country late last year was limited , has been temporarily discontinued. The government is now planning to accelerate the use of Johnson & Johnson vaccines.
“The successful use of a viable vaccine appears to have become critical to addressing the Covid-19 risks and ensuring the survival of the economy,” said the Chamber of Commerce.
South Africa is the hardest-hit country on the continent with nearly 1.5 million confirmed cases and more than 46,000 deaths.
Finance Minister Tito Mboweni’s budget for February 24 will be a turning point and should be careful to make medium-term corrections, adjust public sector finances and put the economy on a growth path, Sacci said.
The capital markets are skeptical of the government’s plans to curb spending and bring national debt back to sustainable levels.
This means that “the only way out of this situation is to improve private sector fixed investment, create credible economic policies that increase confidence in the prospects for economic growth, and the role of the state in reducing borrowing and debt Reduce public debt service costs, ”Chamber said.
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