South African economy contracts after riots, Covid measures
JOHANNESBURG (Reuters) – South Africa’s economy contracted for the first time in a year in the third quarter, as the country was hit by riots and tighter Covid restrictions, official statistics showed on Tuesday .
After four consecutive quarters of growth, the economy of Africa’s most industrialized country contracted by 1.5% between July and September, compared to the previous three months, the SA Stats the agency said.
The contraction has eroded “some of the economic gains the country has made since the severe impact of Covid-19 in the second quarter of 2020”, SA Stats said in a statement.
The economy has underperformed “under double pressure from a tightening of Covid-19 lockdown restrictions and a wave of civil unrest in July, along with several other headwinds,” the agency said.
A wave of arson and looting rocked parts of South Africa in July; following the imprisonment of former President Jacob Zuma for contempt after refusing to appear before corruption investigators.
The unrest in the two most populous provinces of Gauteng and KwaZulu-Natal has left more than 300 dead and caused damage worth more than $ 1.7 billion (1.5 billion euros).
The country worst affected by Covid in Africa also tightened restrictions on coronaviruses in July to deal with a third wave of infections.
South Africa is also entering a fourth wave of infections fueled by a highly mutated virus variant known as Omicron.
Dozens of countries have blacklisted South Africa as the first country to officially announce detection of the variant, dealing another blow to its struggling tourism industry ahead of the peak summer season.
GDP in the third quarter of 2021 was comparable to that of the first quarter of 2016, he added.
Six of South Africa’s top 10 industries saw production decline in the third quarter.
Trade, food and accommodation industries fell 5.5 percent.
Fourth wave ahead
The manufacturing sector shrank 4.2 percent, while agricultural activity fell 13.6 percent, its largest decline in five years.
Household spending also fell by 2.4 percent, with lower spending reported for both durable and non-durable goods.
“The looting and closure of retailers in KwaZulu-Natal during the civil unrest resulted in food shortages. Many consumers have found it difficult to purchase basic supplies, ”the data collector said.
South Africa was in recession when the pandemic hit.
A strict lockdown imposed in March of last year crippled many industries and continued restrictions continued to stifle business.
Recurring power cuts imposed by aging and poorly designed power plants have compounded economic problems.
The economy contracted a record 6.4% in 2020, but rebounded faster than expected in the first half of this year.
Real GDP in the first nine months of 2021 grew 5.8% compared to the same period the previous year, and the economy is expected to grow 5.1% in 2021.
But unemployment continues to hit new highs since the onset of the coronavirus, reaching 34.9% in the third quarter of 2021.