July unrest and lockdown cause 1.5% contraction of South Africa’s economy

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South Africa’s economy contracted by 1.5% in the third quarter (Q3) of 2021 – with the July civil unrest and a level 4 lockdown in June/July causing much of the damage.

This is according to Statistician-General Risenga Maluleke who presented Q3 gross domestic product (GDP) figures on Tuesday (7 December).

South Africa’s GDP falls by 1.5%

“After recording four consecutive quarters of positive growth, real GDP slumped by 1.5%, eroding some of the economic gains the country has made since the severe impact of COVID-19 in the second quarter of 2020. In the third quarter of 2021 the level of GDP was on par with the first quarter of 2016,” Maluleke said.

“Six of the ten industries recorded a decline in production in the third quarter, with agriculture, trade and manufacturing the hardest hit.

“The agriculture industry recorded its biggest drop in production since 2016, contracting by 13.6%. Together with a decline in the production of animal products, the industry in KwaZulu-Natal was dealt a major blow by the civil disorder in July. Maize, citrus and sugarcane farms recorded losses from fires set during the upheaval.”

The trade industry also declined by 5.5%, with the wholesale, retail and motor trade sectors particularly hit by widespread looting and destruction of property in Gauteng and KwaZulu-Natal provinces in July.

Level 4 lockdown

“In response to the rapid spread of the COVID-19 Delta variant, the country was on Alert Level 4 lockdown from 28 June to 25 July. This stymied growth in the tourist accommodation sector, as well as constricting restaurant and catering trade,” Maluleke added.

Another factor was the cyberattack in July that disrupted operations at South African ports, thereby negatively affecting motor trade in the country.

The civil unrest further combined with a worldwide shortage of raw materials to cause a contraction in the manufacturing industry by 4.2%.

The Statistician-General also said, “The transport and communications industry didn’t escape unscathed. Road freight transport into and out of KwaZulu-Natal was severely disrupted by the violence. Several domestic airlines recorded flight cancellations following leisure travel restrictions imposed by the Alert Level 4 lockdown.”

Just four industries recorded growth in the third quarter – finance (1.2%), personal services (0.5%), government (0.4%), and electricity, gas and water (0.4%).

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