South Africa’s GDP will take five years to recover, says UNDP study

The study, which focuses on the socio-economic impact of COVID-19 on South Africa, says 34% of households are likely to lose their middle-class status and become classified as vulnerable

South Africa’s gross domestic product is expected to decline by at least 5.1% and up to 7.9% in 2020 and recover slowly through 2024. This will lead to major setbacks in addressing poverty, unemployment and inequality, according to a new UNDP study on the socio-economic impact of COVID-19 in the country.

The study focuses on how COVID-19 will drive temporary and long-term changes in poverty levels in South Africa. The number of households below the poverty line increases as households fall from the lower middle class.

Fifty-four per cent of households which have been pushed out of permanent jobs and into informal or temporary contracts, as a coping mechanism for businesses affected by COVID-19, are likely to fall into poverty after South Africa’s six-month stimulus package ends. Thirty-four per cent of households are likely to lose their middle-class status and become vulnerable.

“Inequalities within and among nations are being exposed and exacerbated by COVID-19, as the poor and vulnerable are unable to protect themselves,” said Nardos Bekele-Tomas, UN resident co-ordinator.

“While government social protection grants tend to target the poorest, this study posits that care and support need to be provided to those at the borderline of the poverty line, such as the vulnerable middle class, to reduce their likelihood of slipping into poverty.

The groups hit particularly hard are already impoverished female-led households, people with only primary education, people without social assistance, black populations, and heads of households who have been pushed from permanent into informal employment.

Skills revolution

The launch of the UNDP report, The Socio-Economic Impact Assessment of COVID-19 in South Africa, brought together representatives of government, civil society, the private sector and academia.

South Africa’s minister of co-operative governance and traditional affairs, Dr Nkosazana Dlamini-Zuma, urged that the study should find its way into every district and municipality. 

She called for a skills revolution complemented by the adoption of a technology strategy and the delivery of a district developing model by promoting gender-responsive budgeting.

Virus’s damaging impact

Personal testimony at the launch by Khumbulile Thabethe, a single parent with three children, was a stark reminder of how the impact of virus is harshest for the most vulnerable in society. 

“I’ve had to prioritise food over winter clothing for my three kids. Lockdown started in the warmer months and as we moved to the colder months, I could not cope,” she told the audience.

South Africa is the country with the fifth-highest number of cases COVID-19 in the world, and the highest number of cases on the African continent. 

The study further observes that economic sectors most disadvantaged by the COVID-19 outbreak include textiles, education services, catering and accommodations (including tourism), beverages, tobacco, glass products, and footwear.

Small and medium enterprises are worst affected. 

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