Share

South Africans are getting poorer as recession hits

accreditation
In these tough economic times saving anything can only benefit you. Picture: iStock
In these tough economic times saving anything can only benefit you. Picture: iStock

South Africa is in a recession and things are looking bleak as people will struggle to keep their jobs and maintain their standard of living.

Statistics South Africa released the Gross Domestic Product (GDP) report for the fourth quarter of 2019 and the numbers paint a pitiful picture of the current state of the economy.

The report shows a GDP decline of 1.4% in the fourth quarter of 2019, while the country experienced a 0.8% decline in the third quarter of 2019.

These consecutive declines mean South Africa enters a technical recession, with the last one taking place in the first half of 2018.

Director of economic consultancy company Econometrix, Dr Azar Jammine, said that the report shows that South Africans are getting poorer.

“South Africans will find it more difficult to keep their jobs. There will be difficulty in retaining pay increases, the infrastructure will decline, and people will have difficulty maintaining the standard of living that they have been accustomed to,” he said.

Key culprits in the growth decline include the transport, storage and communication industries and the trade, catering and accommodation industries.

According to the report, “the transport, storage and communication industry decreased by 7.2%”.

“The trade, catering and accommodation industry decreased by 3.8%.”

In the 2020 budget speech, Finance Minister Tito Mboweni forecasted a 0.9% economic growth for this year.

However, on the back of last year’s poor GDP numbers and the outbreak of the coronavirus, this projected growth looks to be threatened.

According to a Pricewaterhouse Coopers (PwC) report released in February, “many of South Africa’s industries will see an adverse impact from COVID-19 [the official name of the coronavirus], including mobile operators, automotive manufacturers, as well as hospitality and retail establishments.”

The travel restrictions due to the coronavirus – particularly tourists from China – is estimated to result in a 15% decline in South African tourist numbers, leading to a loss of almost R200 million. This would also threaten nearly 1 000 jobs, PwC said.

“We don’t know how serious the effects of coronavirus will be, but clearly it’s going to be negative,” Jammine said.

He also emphasised that the announcement of reducing the public sector wage bill will negatively affect the economy.

“We’ll be lucky if we get any growth this year,” Jammine bleakly stated.

READ: Will Cyril blink on wage bill?

Professor Jannie Rossouw, head of economic and business sciences at the University of the Witwatersrand, said “the GDP decline means that government will have less revenue than budgeted”.

He added that Mboweni’s announcement on the wage bill poses a threat to the economy.

“The wage bill announcement shows clearly that the government cannot afford salary adjustments for civil servants.

“The wage bill was initially negotiated on an assumption that the economy will grow at 2% every year.

“The economy only grew by 0.2% which is much lower than the population growth rate.

This means that our unemployment problem will continue to increase,” said Rossouw.


We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Voting Booth
Do you believe that the various planned marches against load shedding will prompt government to bring solutions and resolve the power crisis?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes
21% - 103 votes
No
79% - 394 votes
Vote