Economic Outlook 2021: Now Is The Time To Build Reserves

After a particularly tough year for its economy, South Africa faces many challenges in 2021. Reduced spending power, credit downgrades, and a second wave of COVID-19 could put a damper on agricultural profits this year, and farmers will need to consider their marketing plans carefully. Lindi Botha shares advice from two of the country’s leading economists.

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Economist Kulani Siweya says that despite the attraction of the export markets, farmers are likely to continue supplying the local market in full, due to strong demand and generally good returns.

How do you foresee economic conditions playing out in 2021?

PROF JOHANN KIRSTEN (JK) is the director of the Bureau for Economic Research. KULANI SIWEYA (KS) is an agricultural economist at Agri SA.

JK: With higher business confidence and pent-up demand, there’ll certainly be economic recovery, and we could see positive economic growth in 2021. However, it will take the South African economy until 2025 to reach the GDP levels of December 2019. This is not good for employment or inequality, and will increase poverty levels. And if the phasing out of the income support schemes is added, then the true extent of the blow to income from lockdowninduced business closures and the large number of retrenchments will be laid bare.

A second domestic wave of COVID-19 would be another major damper on consumer demand.

FAST FACTS The further downgrading of the Land Bank’s rating puts food security in jeopardy.

Citrus exports should do well with a weaker rand, due to high demand for the fruit as a healthy food source.

Another hard lockdown would leave South Africa’s embattled economy in dire straits.