Unrest and COVID-19 will reduce South African growth

Significance

This chokes off an unexpectedly strong economic recovery in the first half of 2021. Meanwhile, unemployment has hit a record high at 35%, or 47% according to the expanded definition which includes people who have given up looking for work.

Impacts

• Without higher economic growth, the unemployment rate will not substantially improve.
• The combination of low growth and high unemployment heightens the chance of further violent unrest.
• The government will have difficulty sticking with debt reduction plans without further dampening growth.
• Planned reforms in the energy sector could ease some of the country’s electricity woes in the medium term.