Riots set to cause E1.2bn GDP shortfall

MBABANE – The economic impact of the civil unrest is expected to dampen the recovery momentum.

In June/July this year there were riots which led to destruction of physical assets, theft of inventory and constrained operational hours among other things.

In a medium term outlook statement, Minister of Economic Planning and Development Dr Tambo Gina, said as a result of the disruptions in production, real growth projections were revised down from 3.3 per cent (pre-civil unrest) to 1.4 per cent in 2021.

Value

In nominal value terms, the shortfall in output (overall gross domestic product) is estimated at E1.216 billion.

Sectors such as the wholesale and retail as well as manufacturing, transport and logistics and other services were among the hardest hit.

“The losses, notwithstanding the launch of the Reconstruction Fund by His Majesty King Mswati III, are anticipated to mitigate the estimated losses in gross output and support the envisaged recovery in certain sectors,” shared the minister.

In his medium-term projections, the minister said the disruptions faced in 2020 and this year arising from a combination of restrictive measures in the fight against COVID-19, as well as unprecedented socio-political unrest were expected to subside in 2022.

“Sectors that faced a delayed recovery such as tourism related activities and wholesale and retail trade are expected to pick up from low base effects of the previous two years,” highlighted the minister.

Effects

On the contrary, second round effects of the COVID19 pandemic are expected to manifest on fiscal developments as depressed economic activity in 2020 weighed negatively on the South Africans Customs Union (SACU) pool outruns.

This will affect the SACU revenue for member States, particularly for the 2022/23 financial year.

The minister stressed that heightened uncertainty remained for the short to medium-term outlook.

“The major downside risk to the outlook is continued re-occurrence of COVID-19 waves and emergence of newer, resistant and highly infectious variants.

“Additionally, any potential re-occurrence of socio-politically instability locally and neighbouring countries pose a threat to the projections,” stressed the minister.