Skip to content Skip to sidebar Skip to footer

An economic overview: looking back at 2021 and expectations for 2022

Article provided by Liberty Corporate

A good understanding of the economy may enable one to better understand financial markets, which in turn may help one understand what investors may be experiencing when analysing the financial landscape. This article provides an economic overview of 2021, both internationally and locally, and a view of expectations for 2022.

International economic overview for 2021

During 2021, the COVID-19 pandemic remained a significant focus area when observing international financial markets. More recently, the focus has shifted to vaccination rollouts, with over 7.5 billion vaccination doses administered globally by mid-November 2021. Typically, the status of the pandemic influences how countries are being governed and regulated. Recent activities in many countries have proven this, where changes were ultimately made to certain policies in those countries.

Countries around the world are dealing with the COVID-19 pandemic in different ways while being in different stages of infections, and hence lockdowns, at different times. Because different countries are so closely linked to each other through, for example, the exchanging of goods, the pandemic has caused major disruptions in services and hence the production of these goods. A well-known example is the global shortage of semi-conductors, which has delayed the production of electronic products such as cell phones, laptops and cars.

Another consequence of the interrupted supply of goods is the increased demand for these types of electronic goods compared to what countries and their companies can produce. This has caused the prices of these goods to increase, and hence global inflation to increase. As of October 2021, in the USA, inflation was around 5% per annum which was more than double its targeted inflation (the Federal Reserve’s long term inflation target is 2%).

Looking ahead into 2022

These high inflation levels are likely to impact financial markets. Major central banks such as the US Federal Reserve need to find appropriate ways to manage these high inflation levels. These banks need to be careful in how they use interest rates to manage inflation and the impact this may have on the economy. If interest rates are increased too much, economic growth could be negatively impacted.

This may then increase unemployment levels during a specific time when people cannot afford to lose their jobs. If interest rates are increased, but not enough, financial markets may also be negatively affected. For example, the value of savings will decrease and the country’s currency might become too cheap.

On the other hand, if central banks do not increase interest rates and inflation fears are proven wrong, financial markets are likely to do well because of a strong economy with a high demand for goods.

South African economic overview for 2021

The South African economy was impacted by a number of obstacles in 2021 such as the COVID-19 pandemic, the looting and riots that occurred during the year as well as electricity outages due to loadshedding. South Africa also experienced its highest ever unemployment rate of 34.9%. Although economic growth has not yet reached pre-COVID-19 levels, it has been faster than expected.

More than 24 million COVID-19 vaccination doses were administered locally as at mid-November 2021. This was a result of how the vaccination doses had been handed out to individuals, as well as a large supply of the vaccines. The South African tax revenue was higher than its budget, largely due to the export of commodities like gold. This, along with the revised economic forecasts, meant that government debt decreased. This is good news, as it could help South Africa avoid further credit rating downgrades and attract more investments from foreign investors.

Looking ahead into 2022

While the COVID-19 pandemic in South Africa is expected to continue impacting society and the economy, the anticipated fourth wave of infections was expected to be less severe than previous waves. South Africa, along with many countries around the world, may face further interest rate increases due to increasing inflation. Overall uncertainty in financial markets will be high until inflation slows down. However, these concerns are not impossible to overcome. Some of the government’s plans, such as allowing the private sector to produce electricity and commitments made in the Medium Term Budget Policy Statement to offer no new money to State Owned Entities (SOEs) outside of debt funding for existing commitments, are encouraging, since many of these SOEs have posed a significant risk to the public finances.

2021 has been a tough year in many aspects, for both the local and international economies. Although the effects of the COVID-19 pandemic will continue to be seen for a while into the future, there are signs that the global economy is improving, and that the South African economy can improve if the right policy steps are taken.

In it with you to add value

2021 has been a challenging year due to the ongoing COVID-19 pandemic. In South Africa, we have already experienced four waves of COVID-19 infections. Economic activity has resumed with the country now back to adjusted level 1 lockdown. The COVID-19 vaccines have been rolled out by the government with over 16 million people having had at least one dose of a vaccine. In many European countries, we have seen that vaccination levels are high and although infections may have increased again more recently, the number of COVID-19-related deaths are lower than during previous waves because of the high vaccination levels. This illustrates the impact that the COVID-19 vaccine continues to have on severe cases of the COVID-19 outbreak. The COVID-19 pandemic has been a timely reminder of what is important to us, including the ability to protect and provide for our families should anything happen to us.

At Liberty, our purpose is to improve people’s lives by making their financial freedom possible.

We do this by offering various risk protection benefits that employers may purchase on behalf of their employees. Different types of risk protection benefits include cover for death, disability and critical illness, among other offerings.

Emergency and assistance services through our Value Added Services

There was a fourth wave of infections that occurred during December 2021, partially as a result of less than 50% of the South African population having been vaccinated at the time. The vaccination rate has been slower than expected and we are unlikely to reach the required vaccination levels to obtain some form of herd immunity.

Physical health and mental health remain important considering the challenges brought on by the COVID-19 pandemic. These challenges experienced in the various levels of lockdown have affected employee wellbeing and thus productivity. Our Value Added Services are always available to assist you and your immediate family to reduce the emotional strain and stress experienced during these uncertain times.

During the past year, an increase in utilisation of our Value Added Services was approximately 7.4%, which indicates the necessity of these services. More specifically, we have seen a 43% increase in the number of calls in 2021 from our Liberty Corporate clients requesting support relating to trauma counselling. The increase in calls was compared to the same period over 2020.

The themes that were dominating amongst these calls for trauma assistance support were due to the following:

  • COVID-19-related support where members are seeking counselling in coping with fear and anxiety surrounding infections, members testing positive and their loved ones testing positive; and
  • Work stress or burnout and financial pressures brought on by the various impacts on the economy due to the lockdown restrictions; and
  • A strain on relationships.

During this time, as you prepare to start the new year, you may be worried about what our “new normal” may look like during this uncertain time. This uncertainty could lead to increased stress and anxiety, and you may require the need to speak to a professional. Our Value Added Services are available 24 hours a day and include:

  • Trauma Helpline;
  • Medical Information and Advice;
  • R5 000 for Hospital Admission Guarantee;
  • Emergency Ambulance Assistance; and
  • Legal Advice Helpline.

If your employer has taken a funeral policy with us on your behalf, you and the insured lives under the policy will also have access to funeral assistance services, including body repatriation.

As we begin the start of a new year, with renewed energy, Liberty Corporate wants to assure you that we remain in it with you.

Liberty Corporate ensures that your risk benefits remain available to you. With our range of death benefits, critical illness benefits and disability benefits, we have ensured that provisions have been made to give you peace of mind.

Economic overview based on STANLIB Asset Manager Economic Feedback by Kevin Lings (October 2021). A recording of this is available at

Liberty Corporate is a proud Partner of the NSBC

Get the best business tips delivered to your inbox!

© NSBC Africa 2023. All Rights Reserved.