The unemployment rate currently stands at 29.1%.
An economist at Nedbank, Johannes Khosa says South Africa’s recessionary environment will further hamper efforts to create jobs. This comes as figures released by Statistics South Africa (Stats SA) reveals that South Africa has fallen into a recession for the third time since 1994.
Stats SA figures have revealed that Gross Domestic Product (GDP) decreased by 1.4% in the fourth quarter of 2019, following a contraction of 0.8% in the third quarter of 2019.
A recession is defined as two consecutive quarters of negative economic growth. Khosa says the high unemployment which currently sits at 29.1% is likely to persist.
“Contraction in GDP, it simply means that we are not likely to see an increase in employment which is a very important indicator for consumer spending in the economy and for the wellbeing of households in South Africa, for the fact that we have seen two consecutive quarters of contraction is bad news, we have already seen the employment numbers reaching record highs in the fourth quarter.”
Meanwhile, Chief Economist at Econometrix Dr Azar Jammine says the likelihood of further credit rating downgrades is now high.
“ To some extent, many will suggest that this is not surprising given the unexpected onset of load shedding, the downward revision of outlooks on our credit rating, the problems with SAA and Eskom all of which contributed towards a loss of business and consumer confidence. In addition, the uncertainty created amongst the investment community regarding issues such as land expropriation without compensation and interference in the Reserve Bank and attempts of nationalising it without a doubt, this enhances the likelihood of South Africa ‘s credit rating being reduced further.”