https://www.engineeringnews.co.za
Africa|Construction|Manufacturing|Mining|Services|transport
Africa|Construction|Manufacturing|Mining|Services|transport
africa|construction|manufacturing|mining|services|transport

Five years before economy may return to pre-Covid levels, says Absa’s Gable  

Jeff Gable

Jeff Gable

18th November 2020

By: Irma Venter

Creamer Media Senior Deputy Editor

     

Font size: - +

It will, most likely, take half a decade before the South African economy returns to the level it was at the end of 2019, says Absa chief economist Jeff Gable.

“And 2019 was a miserable year for South Africa – the economy grew barely 0.5%. On top of that we weren’t doing great in the previous years either. So the baseline of 2019 is very undemanding.”

In January, Absa’s forecast for economic growth was between 1% and 1.5%, with the expectation that at the end of 2021 the size of the economy, adjusted for inflation, would be roughly 3.5% bigger than it was at the end of 2019.

Then, however, Covid-19 happened.

Now Gable expects that the domestic economy will still be 4.5% weaker at the end of 2021 than at the end of 2019, with “the end of 2019 far from a promising position for South Africa”.

“It will be late 2024, 2025, before South Africa can get back to where we were at the end of 2019.

“The impact of Covid-19 is very substantial. It is going to be very long-lasting.”

Industries in South Africa that will show a greater than 20% contraction this year will be catering/accommodation (greater than 60%), construction and the motor trade, says Gable.

The manufacturing, mining and transport sectors are likely to contract by between 10% and 20%, with the real estate, electricity, personal services and retail sectors to shrink by between 5% and 10%.

The only two sectors to show growth will be telecoms and agriculture, with telecoms benefitting from the increased use of IT services during Covid-19, and the agriculture sector reaping the benefits of a good rainy season.

With the Covid-19 global economic shock bigger than the great depression in the early 1930s, it is expected that South Africa will continue to shed jobs, adds Gable.

With an estimated million jobs already lost in the formal sector, “I have a strong expectation that it will get worse before it gets better”.

If the forecast is that South Africa will take a half a decade to return to where it was in 2019, it means that businesses will, in the meantime, most likely be smaller than in 2019 – which means that their ability to hang on to excess staff will “probably be pretty modest”, says Gable.

The one-million jobs already lost will add to South Africa Inc’s smaller wallet, with between R80-billion and R300-billion in consumer spend disappearing. 

Government’s drive to decrease the public sector wage bill is expected to further add to the drop in consumer spending.

 

Edited by Creamer Media Reporter

Comments

Showroom

Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 
Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (15/03/2024)
15th March 2024 By: Martin Creamer
Magazine round up | 15 March 2024
Magazine round up | 15 March 2024
15th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.106 0.161s - 178pq - 4rq
Subscribe Now