The last week of violence and unrest will have a significant impact on a South African economy that was already buckling under the strain of a Covid-19 pandemic and lockdown restrictions, say economists at professional services firm PwC.
In a research note this week, the group said that its calculations show that national GDP growth could be 0.4 percentage points lower this year due to the week of significant disruption.
Given the loss in potential economic growth, PwC estimates up to 50,000 jobs could be at risk under the baseline scenario.
However, this number could creep higher in a downside scenario where South Africa’s GDP is even more greatly impacted than expected by the violence.
“From our perspective, these events essentially placed key areas of the Gauteng and KwaZulu-Natal economies in a virtual level 5 lockdown,” PwC said.
“Many retail shops were closed, inter-provincial transport ground to a halt; diverse places of work were unable to open as normal, and citizens – afraid for their safety – stayed at home.”
The group cited data from Google which shows that workplace activity in KwaZulu-Natal was 21% lower on Friday (9 July) compared to the pre-pandemic period, versus a figure of just 14% a week earlier before protests started.
It added that residential activity was 24% higher on protest-hit July 9 versus the pre-pandemic period compared to a figure of 20% on 2 July as more people stayed home amidst transport and commercial disruption.
The loss of jobs will add to the mounting pressure seen in South Africa, with some analysts pointing to the already high unemployment rate as one of the catalysts behind the looting and violence.
Data published by Nedbank this week shows that while some 847,000 people had found employment since April last year, the economy is still short a massive 1.4 million jobs compared to Q1 2020 before the pandemic struck.
Added to this bleak reality, the number of discouraged workers – those who have stopped looking for work altogether – has increased throughout the pandemic rising to 3.1 million in Q1 – the highest level since the Labour Force Survey started just over 12 years ago.