South Africa economy overview; South Africa’s GDP will take at least five years to recover from COVID-19 impact
The Gross Domestic Product (GDP) in South Africa was worth 351.43 billion US dollars in 2019, according to official data from the World Bank and projections from Trading Economics. The GDP value of South Africa represents 0.29 percent of the world economy.
In the South Africa economy overview, the economy grew by 1.3% in 2017 and 0.8% in 2018. The World Bank projects 2019 growth at 1.3%, accelerating further to 1.7% in 2020. Given population growth, gross domestic product (GDP) per capita growth has been close to nil since 2014, leaving little room to reduce poverty. Commodity prices remain important for South Africa, a major exporter of minerals and importer of oil. Strengthening investment, including foreign direct investment, will be critical to propel growth and create jobs.
In the South Africa economy overview , the gross domestic product (GDP) measures of national income and output for a given country’s economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time.
South Africa remains a dual economy with one of the highest inequality rates in the world, with a consumption expenditure Gini coefficient of 0.63 in 2015. Inequality has been persistent, having increased from 0.61 in 1996. High inequality is perpetuated by a legacy of exclusion and the nature of economic growth, which is not pro-poor and does not generate sufficient jobs.
In the South Africa economy overview, the inequality in wealth is even higher: the richest 10% of the population held around 71% of net wealth in 2015, while the bottom 60% held 7% of the net wealth. Furthermore, intergenerational mobility is low meaning inequalities are passed down from generation to generation with little change in inequality over time. Not only does South Africa lag its peers on level of inequality and poverty, it lags on the inclusiveness of consumption growth.
South Africa’s overall GDP is expected to decline by at least 5.1 and up to 7.9 percent in 2020 and recover slowly through 2024. This will lead to major setbacks in addressing poverty, unemployment, and inequality, according to a new UNDP study on the socio-economic impact of COVID-19 in South Africa.
The study focuses on how COVID-19 will drive temporary and long-term changes in poverty levels in South Africa. The number of households below the poverty line increases as households fall from the lower middle class. Fifty-four percent of households that have been pushed out of permanent jobs to informal or temporary contracts as a coping mechanism for businesses affected by COVID-19 are likely to fall into poverty after the 6-months stimulus package is over. Thirty-four percent of households are likely to exit the middle class into vulnerability.
“Inequalities within and among nations are being exposed and exacerbated by COVID-19, as the poor and vulnerable are unable to protect themselves,” said UN Resident Coordinator Nardos Bekele-Tomas. “While Government social protection grants tend to target the poorest, this study posits that care and support need to be provided to those at the borderline of the poverty line, such as the vulnerable middle class, to reduce their likelihood of slipping into poverty.”
Populations hit especially hard are already-impoverished female-headed households, persons with only primary education, persons without social assistance, black populations, and heads of households who have been pushed from permanent to informal employment.
The launch of “The Socio-Economic Impact Assessment of COVID-19 in South Africa” report brought together representatives from government, civil society, private sector, and academia. South Africa’s Minister of Cooperative Governance and Traditional Affairs Dr. Dlamini-Zuma urged that the study should find its way into every district and municipality. She called for a skills revolution complemented by the adoption of a technology strategy and the delivery of a district developing model by promoting gender-responsive budgeting.
South Africa is the country with the fifth-highest number of cases COVID-19 in the world, and the highest number of cases on the African continent. The study further observes that economic sectors most disadvantaged by the COVID-19 outbreak include textiles, education services, catering and accommodations (including tourism), beverages, tobacco, glass products, and footwear. Small and medium enterprises are most negatively impacted.
Read the report: The Socio-Economic Impact Assessment of COVID-19 in South Africa.
Original source: UNDP