Experts say South Africa’s economic future looks grim after unrest
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Cape Town - As several malls in Cape Town chose to close after rumours of possible looting circulated, economists and political analysts said those that have looted and set fire to malls, warehouses and shops, has poured fuel on an already imploding economy.
Political economy analyst Daniel Silke said the combination of Covid-19, the unrest and looting and the already poor economy was a “triple whammy”, and for the rest of the year, the economy is going to struggle.
“This is the worst possible news at the worst possible time for South Africa, and I expect the next year to bear the brunt and the fall out of what we have seen just over the last few days.
“The cost to the South African economy is going to probably now be in excess of R50 billion, and that might be a conservative estimate because the unrest is ongoing, and it’s difficult to total all the various concomitant costs.”
The Bureau for Economic Research’s chief economist Hugo Pienaar said it was still early days, and getting an estimate of the damage was very difficult.
“What we can say is we already have updates from a number of listed companies which gives us a sense of the devastation in KwaZulu-Natal, (KZN) in particular.
He said the burning down of factories, the partial closing of the Durban harbour, and parts of the N3 highway, as well as the closing of the freight railway line between Durban and Johannesburg, would all cause logistical issues or problems in a number of sectors because the economies of the provinces are integrated.
“The third quarter GDP figure is going to be horrific. It would have been poor because of the Covid-19 third wave, but now, on top of that, you have this very severe disruption in KZN, and so I think that the growth outlook has certainly deteriorated,” said Pienaar.
Political science lecturer Ntsikelelo Breakfast said: “Our thinking as a country is that we want an environment that attracts investors to come and grow the economy and have a trickle-down effect.
“But when you have a political risk such as this unrest, it scares off investors. These are not like the usual service delivery protests.”
He said what made the situation worse was the fact that the president had just announced his economic recovery plan, and this was now bound to be affected.
However, economist Dawie Roodt said that while the damage to the economy was huge, from a pure numbers point of view, the impact would not be that much in the short term.
Meanwhile several Cape Town malls and centres have decided to close earlier, and some will remain closed over the weekend, because of perceived threats of violence and looting.
The shopping centres, which are in various areas across the city, yesterday began notifying the public of their decisions, citing possible unrest and fear of chaotic looting as their motive.
This comes after a message warning of possible looting sprees began circulating on social media earlier this week. The message, which listed several Cape Town malls - including Cavendish Square, Kenilworth Centre and Landsdowne Corner Mall - has been censured by the provincial government.
In a statement, Western Cape Premier Alan Winde said the message, which had caused a worrying chain reaction of fear across the province, had been invalidated by the Joint Operations Centre and the police, which were working in conjunction with inter-government departments to mitigate risks.
Business Unity SA president Sipho Pityana said: “There is a lot of anxiety in the business sector, because there is no assurance that what’s happening in the other provinces will not filter to the rest of the country.
“As a confederation of business associations, we have been receiving feedback from our members and also investors who say they are concerned about the situation. Some of them even said they were concerned about our security structures and how weak they seem against the crowds.
“These are issues we can’t afford to entertain right now, and we are calling on law enforcement agencies to work harder, to ensure that no more businesses will be ransacked. To business owners, we are advising them to work in partnership with security forces and not take matters into their own hands.”