Unemployment warning for South Africa – BusinessTech
South Africa’s unemployment rate took a knock in February when it recorded an increase for the last quarter of 2023, and according to the International Monetary Fund (IMF), it’s only going to get worse.
According to Stats SA, employment dropped by 22,000 in the last quarter of 2023, raising the official unemployment rate by 0.2 percentage points to 32.1%.
The expanded unemployment rate decreased slightly by 0.1 of a percentage point to 41.1%.
This tallies the official unemployment rate at 7.9 million people and the expanded unemployment rate at 11.7 million.
The uptick beat expectations, as the median estimate of surveyed economists was 31.6%. South Africa’s uptick in unemployment was attributed to the social services, construction, and agriculture sectors cutting jobs.
Interestingly, Stats SA highlighted in its presentation that the number of unemployed people in South Africa increased substantially over the last decade, from 4.8 million in Q4:2013 to 7.9 million in Q4:2023 (+3.1 million people).
According to the IMF’s latest World Economic Outlook report, these numbers are expected to deteriorate further.
South Africa’s unemployment rate is projected to rise to 33.5% this year and worsen to 33.9% in 2025.
Alarmingly, of the over 100 countries included in the IMF’s report, only Sudan’s unemployment rate was worse than South Africa’s, which was 46% and projected to reach 48.2% by 2025.
The statistics body, in its February report, warned that the jobless rate may continue to rise as weaker commodity prices, energy shortages, and logistics constraints on the freight-rail system and at ports operated by Transnet affect mining companies’ profits, which the IMF agreed with.
According to the report, while growth in employment and incomes held steady in many of the countries covered by the IMF, South Africa was an outlier.
The report showed that the country’s real per capita output was predicted to shrink from 0.9% last year to 0.6% this year and 0.3% next year.
The IMF expressed concern over the increasing gap between low-income developing countries and the rest of the world.
It noted that these economies are experiencing a downward revision in growth while inflation is on the rise.
Furthermore, the scarring estimates for low-income developing countries, including some large ones, have been revised upwards, indicating that, unlike other regions, the poorest nations are still struggling to recover from the pandemic and the resulting cost-of-living crises.
South Africa’s annual consumer inflation is predicted to average 4.9% in 2024. The IMF forecasts a lower real GDP rate for South Africa at 0.9% this year, an improvement from last year’s 0.6%.
However, the IMF also predicts a lower rate of 1.2% in 2025. These predictions contrast with those of the National Treasury and the central bank, indicating some uncertainty in South Africa’s economic forecast.
Read: New laws for schools in South Africa get the green light – despite objections