Answer to Question #192167 in Macroeconomics for Sinentlahla

Question

How has the covid 19 pandemic impacted on the South african economy? Explain your answer by using the framework and statistics around the objectives of economic policy

Economic growth, low levelz of unemployment, price stability, balance of payment equilibrium, balanced budget and equity in distribution

Answer 1

$$Soluton$$

Since the onset of the Covid -19 pandemic there is reduced economic growth it has a deficit of 2.4%of GDP on its current balance in April -June from a revised surplus of 1.2%GDP In the prior quarter. The GDP has shrank 7% compared with a 0.2% expansion in 2019. Fall is due to decline /inactivity of economic productive sectors e.g. manufacturing .

There are high levels of unemployment opposite of the objectives of expected low unemployment levels .The unemployment rate stood at 32.5% in the October -December quarter meaning 7.2 million people were unemployed up from 30.8% in the previous three months .

The price commodities have also shot up , the essential commodities have seen a rise in price margin of 14%. this has hit hard on the south African people.

The balance of payments have also been affected . under a worse case scenario, where the pandemic persists the current account deficits for the year 2020 was projected to be 3.9% of GDP. previous to the pandemic of 3.4% of GDP was projected for 20201 it was revised to 3.7% of GDP considering worst case scenario.

The balanced budget and equity distribution has not been achieved. The essential sectors of the have faced deficit with priority being given to the health sector to offset deficit due to Covid -19.

source: world bank, reuters.com ,africanews.com ,bank of south Africa.