Answer to Question #221262 in Macroeconomics for Ronald

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:

- Include all macro-economic indicators that explain the health of the macro-economy.
- link all these macroeconomic indicators to the circular flow diagram. No need to draw it.
- Give an overview of the South African economy showing the trends in the past decade

Answer 1

1. Employment- research shows that among a sample of adults who were employed before the lockdown in South Africa, those who lost their jobs or whose jobs were furloughed reported significantly leading to unhealthy economy in south Africa. Unemployment is an indicator of an unhealthy economy ,unemployment increased compared to the condition of south Africa a decade ago.
2. Investment-the south African government concentrated much on covid 19 hence there were no fun ds left for the investment since funds were being allocated for covid 19 vaccines, masks and also there were lockdown restricting peoples movements which led to a drastical drop in investments both in the private and public sector leading to a poor health in the economy.
3. Economic growth-After this year’s projected contraction at the hands of Covid-19, the economy is seen rebounding in 2021 as domestic and foreign demand revive. That said, high unemployment and persistent electricity shortages are likely to weigh on growth, while frail fiscal metrics and a ballooning public debt stock pose additional risks. Focus Economics panelists see the economy expanding 3.6% in 2021, which is down 0.1 percentage points from last month’s forecast, and 2.5% in 2022.THe GDP that measures economic growth also dropped compared to the previous decade hence the economy was worse off compared to the previous decade.