Answer to Question #220540 in Macroeconomics for bunnybear

Question

The South African economy, like most world economies, has been struggling following the COVID-19 pandemic. Give a diagnosis of the health of the South African economy following the changes in it’s macroeconomic indicators in the past 5 years. Your analysis should: (20 marks)

ˆ Include all macro-economic indicators that explain the health of the macro-economy.

ˆ link all these macroeconomic indicators to the circular flow diagram. No need to draw it.

ˆ Give an overview of the South African economy showing the trends in the past decade.

Answer 1

1. Gross Domestic produce. South Africa experienced a steep slump in GDP due to Covid 19. GDP fell by 16% between the first and second quarter of 2020 leading to an annualised growth rate of -51%.
2. House hold spending. Housing state in south Africa shows that housing spending slumped by 49.8% in line with closure of hotels, restaurants, transport services, recreational facilities and many others.
3. Inflation rate. As at June 2020 projected inflation in south Africa was revised at 5.2% before covid the inflation was expected at 4.7%. Inflation rate for 2021 was reviewed at 4.6%.
4. Unemployment. In south Africa an estimate of between 2.2 million and 2.8 million adults lost their jobs between February to April 2020 following lockdown measures.

The South Africa's real GDP growth was 0.2% in 2019. The pandemic and the containment measures to curb the spread of the virus damaged the economy. The real GDP contracted by 8.2% in 2020.