South African President Cyril Ramaphosa warned of widening job losses as the effects of a shutdown to curb the spread of the coronavirus batters the economy.
Companies in the aviation, construction, entertainment and hospitality sectors have indicated plans to cut jobs because of heavy losses experienced in the past three months, Ramaphosa said Monday in his weekly newsletter. Small companies are being hard hit and some businesses are closing down permanently, he said.
South Africa’s unemployment rate for the first quarter, due Tuesday, is forecast to rise to 29.7%, according to a Bloomberg survey of economists. That would be the highest level in the statistics agency’s current data series dating back to 2008. Telkom SA and local Walmart unit Massmart are among companies that announced plans to cut thousands of jobs even before the lockdown started on March 27.
“For a country which was already facing an unemployment crisis and weak economic growth, difficult decisions and difficult days lie ahead,” Ramaphosa said.
More than 7 million jobs could be shed in a worst-case scenario due to the impact of the virus and a lockdown that brought economic activities to a standstill, the National Treasury told lawmakers in May.
Africa’s most-industrialised economy could contract by 7% this year, according to central bank estimates. That would be the most since the Great Depression, when output fell by 6.2% in 1931, central bank data show. Finance Minister Tito Mboweni will give more details on the virus’s economic impact when he presents a revised national budget in parliament on Wednesday.
© 2020 Bloomberg