Riots, port stoppages dim South Africa economic growth prospects

South Africa’s economic growth prospects waned for the first time this year after deadly riots and a cyber attack on the nation’s ports operator weighed on activity. 

Economists surveyed by Bloomberg predict gross domestic product will expand 4.2% in 2021, compared with a previous estimate of 4.5%. While that matches the central bank’s forecast, Governor Lesetja Kganyago has warned that the economic damage caused by last month’s unrest could “fully negate” the better-than-expected first-quarter expansion and have a lasting impact on investor confidence and job creation. 

The unrest will probably result in the economy contracting by an annualized 0.5% in the third quarter and shave 0.4 percentage points off GDP growth this year, according to central bank forecasts. The security breach at Transnet SOC Ltd. that hobbled trade at key container terminals and led the company to declare its second force majeure in a month is also expected to have weighed on activity. 

Electricity supply constraints and a new wave of coronavirus infections, which is expected in early December and could prompt stricter lockdown measures, are also risks to the outlook, with output only expected to return to pre-pandemic levels in 2023.