South Africa’s economy amid unrest, Cabinet changes and a mining sector boom

SOUTH AFRICA - Forecast 09 Aug 2021 by Iraj Abedian

South Africa’s growth: South Africa’s economy, which is once again being adversely impacted by another round of more stringent lockdowns on account of the third wave of Covid-19 infections, encountered another setback in July. This was in the form of the civil unrest that took place at the beginning of July, sparked by the arrest of former President Jacob Zuma. Still, we expect real GDP to increase by 4.1% in 2021.

Poverty and unemployment and inequality: Poverty and income inequality are rampant in South Africa, while high unemployment, especially youth unemployment, has been a permanent feature of the economy. The unemployment rate had already crossed 30% pre-pandemic, and the Covid-19 economic crisis has pushed it even higher.

Investment: Gross fixed capital formation has been shown to be an important driver of economic growth in South Africa. Despite this, data shows that South Africa’s investment has been lackluster since the great recession, with a slower pace in investment recorded for all three South African institutional sectors. Nonetheless, a number of developments in the space warrant some optimism as the investment projects have a potential to meaningfully boost South Africa’s growth.

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