As 2021 comes to an end, South Africa sees a drastic rise in its infection rate, an unemployment rate spike, and a drop in third quarter GDP growth. The country is currently in the midst of a fourth wave of the virus, with Gauteng recording over 70% of all new COVID-19 cases, and the seven day rolling average of new cases increased by over 400% since the week prior. Whilst Gauteng is currently experiencing the worst of the fourth wave, all provinces have reported a rapid increase in new cases, with the Western Cape recording over 1,000 cases on Saturday, December 4th. Experts have advised the rate of increase is more severe than the previous three waves of the virus, with evidence that the Omicron variant has a higher transmission rate than other variants. On a more positive note, despite Gauteng’s hospitalisation rate increasing, there’s no news of the health sector being overwhelmed by new COVID-19 cases. At this stage, there may not be stricter lockdown measures announced, but the situation is ambiguous, and anything can change overnight. In light of this, it’s important to exercise caution and socially distance as much as possible to prevent a wave similar to South Africa’s third wave in June that may lead to another economic slow down.
On the data front, StatsSA recently released unemployment data for the 3rd quarter of 2021, which indicates South Africa’s unemployment rate increased to 34.9%, a 0.5 percentage point increase from the 34.4% reported in the 2nd quarter of 2021. The unemployment rate is at an all-time high for the third time this year, with 660,000 jobs lost in the 3rd quarter. To worsen matters, South Africa’s GDP growth contracted by 1.5% in the 3rd quarter, which is far higher than the 0.6% decrease the SARB predicted. ABSA also released their PMI index, which increased to 57.2 in November, 3.6 points more than what was reported in October. This bodes well for the manufacturing sector in South Africa.
As 2021 comes to a close, the COBRA team wishes everyone well for the holidays. There’s a lot of uncertainty surrounding us, but don’t give up hope and keep pushing. If you need a helping hand, please reach out to the COBRA Initiative in the new year for business rescue, management services and financial support.
By: Ashwara Pillay