09 Sep 2021
Posted in Uncategorised
Civil unrest in South Africa to derail economic recovery in 2021, reveals GlobalData
Following the civil unrest in South Africa following the arrest of Former President Jacob Zuma;
Jasleen Sandhu, Economic Analyst at GlobalData, a leading data and analytics company, notes her research into the economic impact of both this unrest and COVID-19 recovery:
“GlobalData has marginally lowered its 2021 GDP growth rate forecast for South Africa from 4.2% in July 2021 to 4.1% in August 2021. The turmoil following Zuma’s arrest has cost South Africa a loss of $3.5bn and has put approximately 150,000 jobs at risk. While things have calmed down since the deployment of the military on 15 July, the underlying, longer-term impact on the economy is likely to outweigh the immediate repercussions of the looting and arson, which will further disrupt the prospects of post-COVID recovery and potentially spur more violence among the public.
“South Africa’s two biggest and most populated cities – Cape Town and Johannesburg – accounted for approximately 20.2% of the country’s annual GDP in 2020. The damage caused to these cities by the orchestrated violence and renewed lockdown will add to the protracted economic lull. GlobalData has revised down economic growth forecasts for August 2021 compared to the previous month – by 0.2 percentage points to 4.8% for Cape Town and by 0.6 percentage points to 4.4% for Johannesburg.
“The Manufacturing Purchasing Managers’ Index (PMI) for South Africa dropped for the third consecutive month from 57.4 in June 2021 to 43.5 in July 2021, reflecting a substantial deterioration in economic conditions. Income from tourist accommodation, which rose by 7.2% (Y-o-Y) in June 2019, recorded a drastic fall of 94.2% in June 2020, and by 56.2% in June 2021 – when compared with pre-pandemic June 2019 income statistics. The unemployment rate surged to the highest level in the world in the second quarter of 2021 at 34.4%. The outlook for the labour market remains poor on the back of uncertain and subdued business environment.
“The government’s $2.6bn relief package, rolled out in July 2021, is expected to compensate for the stop-start curbs induced by the multiple lockdowns, which shuttered thousands of businesses and exasperated rampant unemployment. The upheaval, driven by politics and persistent disparities, is most likely to impel the economy to contract in Q2 and Q3 2021. The country’s annual economic growth figures, which were not projected to return to pre-pandemic levels before 2023, have now been set back even further.”