The effects of the global pandemic on the SA economy in the first quarter of 2021

The effects of the global pandemic on the SA economy in the first quarter of 2021

As the year moves along its course into the second quarter of 2021, we are reflecting and reminiscing about the past 15 months that have passed, and how severe it has affected the world. Here’s how the pandemic has affected the first quarter of 2021.

Decline in rental office space in CBD due to remote trends being attractive for employer and employee

When lockdown was announced in early 2020 many people were forced to work from home and convert their kitchen in their new office. Little did we know that our shiny kitchen tops would be our new home office for months to come. Due to strict lockdown regulations, South Africans were asked to work from home and a large portion of many industries are still operating remotely.

The surge in remote working had a negative result in commercial office space in major parts of the CBD’s of  South Africa. Fast forward 12 months, many large corporations were working remotely, whether it be on a full time or part-time basis.

The effect of Covid 19 on the commercial property industry was immense with loss in the region of between R6-billion and R8-billion in rental income over the lockdown period. Moreover, FNB’s Commercial Property Finance 2021 Property Market Outlook report is projecting that commercial property values will decrease by 9% in 2021. In essence, it could be noted that if you had a plan in order for such an event your business would be able to operate as it did before or at least have systems in place, should a global pandemic strike again.

The unemployment percentage continues to rise 

Getting a job in South Africa is already a struggle on its own, but Covid 19 made it even more difficult for people in the country to get their foot into the job market. Throughout lockdown many companies were forced to close their doors and others were handing out retrenchment forms.

The question that everyone has, is how would one get a job in this horrible climate in South Africa? The latest unemployment figures suggest that the Covid-19 lockdown has made it tougher for job seekers to find an entry point into the labour market and for struggling businesses to create employment.

The future of South Africa employment remains dark with Statistics SA claiming that the official unemployment rate of 32.5% is the highest since the data collection agency began measuring unemployment trends in 2008 through a redesigned survey called the Quarterly Labour Force Survey.

With the high unemployment rate, one can expect that crime will increase or the hope for potential entrepreneurs to come out of this dark period of the current economic climate we are facing.

Tourism industry

South Africa’s hospitality industry continues to take massive financial hits with the summer holiday period coming to an end and winter approaching steadily. Even though many borders were declared open on 17 February, the loss of money in the economy is evident as a result of many tourism companies closing down.

It is well known that the tourism industry contributes massively to South Africa’s economy and can be concluded that the hospitality industry is one of the many industries that were negatively affected and still being affected in Q1 of 2021 in South Africa. It was estimated that the South African tourism industry was valued at R420 billion in 2018.

This estimation begs the question of how many jobs and money was left untapped in the South African economy during the first quarter of 2021. Fortunately, the Department of Tourism has reprioritised R540 million over the medium term to establish the Tourism Equity Fund (TEF) to support the tourism sector recovery. One can only hope for an improved second quarter in 2021 in the tourism industry.