July unrest contributed significantly to economic contraction in third quarter: Economist

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Economist at ABSA bank Miyelani Maluleke says the unrest which occurred in KwaZulu-Natal and Gauteng in July is one of the major reasons that caused an economic contraction in the third quarter.

His comments come as Statistics South Africa’s latest figures show that the country’s economy contracted by 1.5% in the third quarter of 2021.

Ziviwe Bubu, Senior Sales Trader at Nedbank takes a look at the GDP numbers:

The decrease in economic activity was reported in wholesale, retail and motor trade, as well as catering and accommodation services sectors.

Maluleke says the numbers further point to a significant decline in activity in manufacturing and agriculture.

“I think there are really two main issues that we believe delivered this contraction and one is the big third wave of COVID-19 infections that we saw which affected many parts of the services sector particularly tourism, and the second factor is really the events of July. That unrest had major impacts on the various sector of the economy including retail and manufacturing.”

Stats SA further said: “Four industries managed to keep their heads above water. The finance industry increased economic activity by 1.2%. Personal services saw an uptick in economic activity on the back of increased spending on private healthcare and the rollout of COVID-19 vaccines for those aged between 18 and 35 years. General government expanded by 0,4%, attributed to a rise in employment in local government and extra-budgetary accounts and funds.”