KZN, GP riots could shave up to 0.9 percentage point from SA's GDP

That’s according to the national treasury, which has been briefing Parliament’s select committee on finance on the impact of the violence which erupted last month after former President Jacob Zuma was jailed for contempt of court.

FILE: People carry goods as they loot and vandalise the Lotsoho Mall in Katlehong township, East of Johannesburg, on 12 July 2021. Several shops are damaged and cars burnt in Johannesburg, following a night of violence. Police are on the scene trying to control further protests. It is unclear if this is linked to sporadic protests following the incarceration of former president Jacob Zuma. Picture: Phill Magakoe / AFP

CAPE TOWN - Damage to the economy from the recent unrest, which ripped through KwaZulu-Natal and Gauteng could shave between 0.7 and 0.9 of a percentage point from GDP growth during 2021.

That’s according to the National Treasury, which briefed Parliament’s select committee on finance on Tuesday on 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 cut by up to 0.9% this year, this doesn’t account for potential value chain disruptions and second-round effects on prices and output in the economy.

Treasury official Duncan Pieterse said the impact could be long term: “When you review the literature on these kinds of shocks, it is clear that the GDP does still remain below the pre-shock level for some time and in general for at least six quarters after the shock has happened, like this unrest.”

Together, KwaZulu-Natal and Gauteng contribute 50%of national gross domestic product. Zuma’s home province, KZN, is responsible for 16% of national GDP and bore the brunt of the violence and looting.

Pieterse also cited figures from the beyond COVID research initiative, which showed small medium and micro-enterprises accounted for 89% of business hit by the unrest only 6% of these have reopened, while 51% have closed, of which 7% will not reopen. While 44% say they’ve closed temporarily it is as yet unclear how many will reopen their doors.

Download the Eyewitness News app to your iOS or Android device.