Cape Town’s economy to rely on a booming export market as tourism lags

Exports are key to boosting the Western Cape economy as uncertainty persists over the tourism sector which suffered a shortfall of R11 billion last year, the provincial government said.

MEC for Finance and Economic Development David Maynier presented the Western Cape Province Economic Review and Outlook outlining the province’s economic growth trends this year.

Maynier said the province’s economy has been hit hard by the Covid-19 pandemic which has impacted lives and livelihoods.

While the national economy is expected to recover and grow 3.6% for 2021, the recovery in the Western Cape is expected to be at a 3% lower level.

“This year, the provincial economy will grow at a slower pace than the national economy, which illustrates the impact of the Covid-19 pandemic and the associated lockdown restrictions on the tourism and hospitality sector, which represents 4.5% of GDP and 6.6%. of total employment in the Western Cape, ”Maynier said.

Over the next five years, the Western Cape economy is expected to grow at an average annual growth rate of 2.9%.

According to the report, the province’s economy will be supported by the recovery of the export market.

“Between 2016 and 2020, export growth in the Western Cape was primarily supported by agricultural exports largely thanks to a stellar performance of 44.4% in 2020. Supported by a relatively weaker local currency and fewer restrictions Covid, the sector is likely to continue its significant contribution to Western Cape exports, ”the report reads.

At least 47.3% of the province’s exports go to developed countries, including the United States and the United Kingdom, which are expected to record recoveries this year.

Cape Town Harbor is a key player in advancing the Western Cape economy by developing its export market. Image: File.

In 2020, the largest export markets for the Western Cape were the Netherlands at R12.5 billion, the United Kingdom at R12.3 billion and the United States of America at R10.8 billion. of rand. The top three export destinations in Africa included Namibia at R 9.9 billion, Botswana at R 9 billion and Lesotho at R 7.9 billion.

In 2020, the agriculture and agri-food processing sectors together contributed 8% of total economic activity and provided 10.4% of all employment opportunities in the province. The province contributes more than 90% of the national exports of blueberries, bulk wine, pears, bottled wine and apples.

“The expected recovery of the provincial economy will be driven by the finance, trade and tourism sectors. However, the recovery is expected to be slower than expected due to a resurgence of Covid-19 cases and subsequent waves of infections forcing a new lockdown restriction, ”the report said.

“The outlook is further weakened by the slower-than-expected vaccine uptake due to reluctance, which has increased the risk of a fourth wave of infections in the last quarter of 2021.”

Over the weekend, the national government launched a large-scale “Vooma vaccination” campaign to get people vaccinated before the holiday season.

President Cyril Ramaphosa’s decision to reduce the country’s lockdown restrictions to Level 1 was one of four demands, Maynier listed as a priority to give the Western Cape tourism sector the boost it needs.

Among them were the removal of South Africa from the UK’s Red List, an increase in vaccinations, as well as an initiative to implement proposals for remote work visas and the approval of the Delta Airline route to include Cape Town on its Atlanta and Johannesburg route.

Tourism contributed more than R 6 billion to the Western Cape Regional Gross Domestic Product (GDPR) in 2020, significantly less than R 15 billion in 2019. Around 75,000 jobs were lost in the sector in 2020.

South America was the leading region of the Western Cape in terms of international tourist arrivals accounting for 21%, followed by Europe with 19% in 2020. The province’s total foreign direct expenditure was estimated at 9 , 1 billion rand and a total of 6.2 million overnight stays were recorded. in 2020. The average length of stay in the Western Cape at 14.5 nights is the highest of any province.

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