The South African Reserve Bank (Sarb) expects nearly 400 000 people to lose their jobs this year due to the ripple negative effects of COVID-19 on the economy.
The central bank, in its Monetary Policy Review report, said the COVID-19 outbreak has put large portions of the economy into a “policy-induced coma.”
“This is a supply shock, in the sense that no amount of demand can be satisfied if industries are closed. As the supply side of the economy reawakens after the lockdown, however, the demand-side aspects of COVID-19 will become more pressing,” said the SARB.
“Preliminary estimates suggest South Africa could lose about 370 000 jobs this year, on a net basis, with business insolvencies increasing by roughly 1 600 firms as the economy contracts.”
The Sarb has already predicted that the economy will shrink by between 2% to 4% as the COVID-19 plummets an already ailing economy, which fell into a technical recession in the last quarter of last year.
South Africa’s unemployment rate remains 29% – five times the rate for the rest of the world.
