Business Unity South Africa

1

• Business Unity South Africa
• The Impact of the Global Economic Crisis on
  Selected SADC Countries
• 09 December 2009

2
SOUTH AFRICA COUNTRY REPORT

• The impact of the global economic crisis on South
  Africa
• Summary of key findings

3
Real GDP growth

• Economy experienced its first recession since
  1992
• Recessionary effects of the downturn felt in
  South Africas real economy from Q3 of 2008
  (primarily due to commodity price implosion and
  escalating risk aversion)
• Real GDP growth down by 5 to -1.9 in 2009
• Broad-based impact across most economic sectors

4
Some signs of growth recovery

• Positive growth rate of 0.9 (quarter-on-quarter)
  registered in Q3 of 2009
• Recession technically ended.
• But, Q3 real GDP growth still 2.1 lower than
  equivalent in Q3 of 2008

Source Industrial Development Corporation
5
Macroeconomic performance 2006 2008the crisis
not yet biting everywhere

• Investment continued to rise through to 2008
• As did total exports as a of GDP
• However, the current account and government
  budget deficits both deteriorated
• And the social security net widened

6
Household consumption and fixed investment both
down significantly

• Consumer spending declining since Q3 of 2007
• Rate of decline in Q2 of 2009 the worst in 24
  years

Source Industrial Development Corporation

• Considerable slowdown in rate of growth of fixed
  investment spending

Source Industrial Development Corporation
7
Stagnation in employment

• Formal sector employment growth stagnant between
  2008 and 2009
• Declining employment in informal and agricultural
  sectors

8
Sharp increase in unemployment

• Gains in reducing unemployment reversed between
  2007 and 2009
• Unemployment rate increased to 24.5 in Q4 of
  2009

• Close to 960 000 jobs lost in first 9 months of
  2009
• Most job losses (312 000) experienced in trade
  sector
• 221 000 retrenchments in manufacturing sector up
  to end of Q3 of 2009

Source Industrial Development Corporation
9
Sectoral Impact

• Manufacturing and agricultural sectors hardest
  hit due to drop in both domestic and
  international demand
• Financial sector not as severely exposed as a
  result of prudent regulation and supervision

10
Impact on labour and working conditions
Labour productivity and Unit Labour Costs

• Sharp increase in unit labour costs since the
  beginning of 2008
• Labour productivity has remained largely unchanged

Source Industrial Development Corporation
11
Government responses

• Framework Response has focused on 5 key target
  areas
• Job creation
• Education and skills
• Health care
• Rural development
• Fight against crime and corruption
• Interventions proposed by the Leadership Task
  Team have included
• Training layoff scheme
• Support for distressed sectors (clothing and
  textiles, automotive) in the form of rescue
  packages
• Social assistance
• Addressing the food crisis by tackling
  competition in the food supply chain and food
  shortages
• SARS focus on reducing customs fraud and
  implementing new laws
• Job creation through the EPWP
• Assistance to companies through the IDC

12
Success of Government responses

• EPWP has targeted the creation of 500 000 work
  opportunities in 2009
• As of mid-November, 330 000 unverified job
  opportunities have been created (223 568
  verified)
• 4 482 jobs saved through training layoffs scheme
• 7 000 jobs saved through retrenchment action plan
  in the manufacturing, engineering and related
  services sector
• Assistance to companies provided through the IDC
  has secured close to 7 700 jobs
• Government has committed to a 30-day payment
  period for small businesses
• A joint Cosatu and business sector plan for
  companies to curb retrenchments is due to be
  launched next week

13
Summary and Conclusions

• Impact of the global economic crisis in South
  Africa has been felt principally in the countrys
  manufacturing and trade sectors
• Key export industries such as steel, automotive
  and chemical sectors have been particularly hard
  hit
• Close to 1 million job losses reported in 2009
  alone
• Government has responded swiftly through its
  Framework Response and Leadership Task Team
  initiatives
• Government has also articulated the continents
  concerns in global fora such as the G20
• Many countries in the SADC region are taking the
  lead from South Africa in crafting responses to
  mitigate the impact of the crisis