South Africa has shed almost half a million jobs in the first half of the year – with things not looking like they will improve any time soon as the country heads for 0% growth.
Employment data released by Stats SA on Thursday showed that South Africa’s unemployment figures dropped slightly from 26.7% to 26.6% – however 129,000 jobs were still lost in the quarter.
In the first quarter of the year, 355,000 jobs were lost, taking the total to just under half a million (484,000) with prospects for the second half of 2016 looking bleak.
Jobs were lost in the services, agriculture, transport and mining sectors, Stats SA said.
According to economists, South Africa’s 0% growth outlook announced by the South African Reserve Bank in July, shows how much strain the country’s economy is under, with many sectors facing financial strain.
Some argue that the country is showing signs of already being in a recession – though it has managed to avoid the technical definition of two successive quarters of decline.
Finance minister, Pravin Gordhan has said that the country will likely avoid a technical recession, with Q2 expected to show GDP growth – but with the country entering into a highly political period with the upcoming elections and subsequent market reactions, the six months ahead will be tough.
According to financial group Nomura, investors’ outlook on the country is bearish for the second half, with no progress being made on rates, CPI or the current account deficit.
The group also said that the political fallout from the elections is being underestimated, and that a major Cabinet reshuffle by president Jacob Zuma could crush the economy.
“We still believe that asset prices (including the currency and local rates) currently markedly underestimate the political risk premia required into year-end after the local elections, as the ‘war’ between the ANC’s factions resumes and with Jacob Zuma exercising (and remaining in) power – not to mention ratings downgrades still looking likely.”
Taking market conditions into account, and looking ahead to what is expected to be a turbulent political season to the end of the year, Nomura forecast that the rand – which is currently enjoying a stronger position – will end the year at R17 to the dollar.
Source: Business Tech