South Africa: Looting Could Cut GDP Growth By 0.7 Percent
Shops in malls and elsewhere have been stripped and gutted. Fuel refineries have closed. Economists are trying to tot up the damage, likely to be huge.
The looting and rioting that have laid waste to swathes of KwaZulu-Natal and Gauteng in the wake of former president Jacob Zuma’s jailing will curtail economic growth this year but are not likely to spark a rate cut next week when the central bank’s Monetary Policy Committee (MPC) meets.
Economists have been scrambling to re-evaluate their estimates of SA’s growth this year, which was a complicated issue even prior to the week’s looting spree. So far, the dominant voice is saying that, although the economy will be hit, the longer-term effect will be minor. The rand has regained its pre-looting exchange rate, and retailers trading on the JSE are down only marginally.
But some economists wonder whether this isn’t just because the impact of the looting’s effect on the economy hasn’t become fully visible yet.
“We think investors still don’t really get the scale of what has happened,” said the head of capital markets research at Intellidex, Peter Attard Montalto.
His estimates suggest national retailers…