PRICEWATERHOUSECOOPERS (PwC) has warned that South Africa's economic growth could slump slightly, with thousands of jobs on the line due to this week of significant disruption in KwaZulu-Natal and Gauteng.
South Africa has been gripped by a wave of wild riots and looting of shopping malls and factories in protests that began after the arrest of former President Jacob Zuma last week.
Many retail shops were closed, inter-provincial transport ground to a halt, diverse places of work were unable to open as normal; and citizens stayed at home afraid for their safety.
In its July economic outlook report yesterday, PwC said that gross domestic product (GDP) could be 0.4 percentage points lower this year.
The professional and advisory services firm said this adverse effect on regional business activity and supply chains had put 50 000 jobs at risk.
In addition, it said the impact of load shedding is expected to halve GDP growth this year and cost the country 275 000 in potential jobs.
PwC chief economist Lullu Krugel said the disruption to the Port of Durban, which handles 65 percent of the country's container traffic, was significant.
KwaZulu-Natal and Gauteng provinces account for more than half of South Africa's GDP.
Krugel said their baseline forecasts for 2021 now took into account the adverse impact of this unrest during the second week of July.
“From our perspective, these events essentially placed key areas of the Gauteng and KwaZulu-Natal economies in a virtual level 5 lockdown,” Krugel said.
“Our calculations show that national GDP growth could be 0.4 percentage points lower this year due to this week of significant disruption.
“Given the loss in potential economic growth, we estimate up to 50 000 jobs could be at risk under the baseline scenario.”
The PwC economic model considers the varying impacts of lockdown restrictions on different segments of the economy, especially the third wave of Covid-19 infections amidst slow vaccine rollout.
PwC said the severity of the midyear wave, and the accompanying strictness of associated lockdowns, was primarily determining the nature of the economic recovery.
Krugel said their scenarios assume that lockdown restrictions will ease from August although they will remain a burden on the economic recovery.
“The country is expected to be back at lockdown level 1 by September under our baseline scenario as the third wave passes – though we are also vigilant about the risk of a fourth but less severe wave over the December holidays,” she said.
“Combined with other considerations, this outlook would result in economic growth of 2.3 percent this year.”