This is according to the National Treasury, which informed Parliament’s select committee on finance of the impact of violence that erupted last month after former President Jacob Zuma was jailed for contempt of court.
FILE: People transport goods as they loot and vandalize the Lotsoho shopping center in Katlehong township, east of Johannesburg, July 12, 2021. Several stores are damaged and cars set on fire in Johannesburg as a result of a night of violence. Police are on the scene to try to control further protests. It is not known if this is linked to sporadic protests following the incarceration of former President Jacob Zuma. Photo: Phill Magakoe / AFP
CAPE TOWN – Damage to the economy from the recent unrest, which ravaged KwaZulu-Natal and Gauteng, could reduce GDP growth by 0.7 to 0.9 percentage points in 2021.
That’s according to the National Treasury, which informed Parliament’s select committee on finance on Tuesday of the impact of the violence, which erupted last month after former President Jacob Zuma was jailed for contempt of court.
While the recent unrest could see GDP drop as much as 0.9% this year, that ignores potential disruptions in the value chain and second round effects on prices and output in the economy.
Treasury official Duncan Pieterse said the impact could be long-term: “When you look at the literature on these types of shocks, it is clear that GDP remains below the pre-shock level for some time. time and usually for at least six quarters. after the shock, like these troubles.
Together, KwaZulu-Natal and Gauteng contribute 50% of the national gross domestic product. Zuma’s home province, KZN, is responsible for 16% of the national GDP and has suffered most of the violence and looting.
Pieterse also cited figures from the Beyond COVID research initiative, which showed that small and medium-sized businesses accounted for 89% of businesses affected by the unrest, only 6% of them reopened, while 51% closed. , of which 7% will not reopen. While 44% say they have closed temporarily, it is not yet clear how many will reopen.
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