SA’s lower GDP number increases country’s risk profile

A DECREASE in South Africa’s gross domestic product by 0.7% percent in the second quarter of 2022 poses a new cost-of- living risk for the country. The latest figures reveal the country’s economy in the second quarter was smaller than it was before the outbreak COVID-19 pandemic. What is more worrying is that key sectors like manufacturing, agriculture, trade, and mining were significant negative contributors.

Two major risk events – the flooding in KwaZulu Natal and ongoing loadshedding contributed to the decline. Notes Pat Semenya CEO of the Institute for Risk Management South Africa (IRMSA): “These numbers have increased the country’s internal risk profile considerably and it’s now incumbent on risk professionals to factor this in when it come to sort and medium-term strategic planning. Of particular concern is the retail industry as people are spending less on items like alcohol and clothing. Less spend by consumers means slower growth and that could have a knock-on impact on business closure and jobs.”

The macro risk for South Africa says Semenya will be a longer economic recovery time as a slower increase in living standards takes effect. There is also the concern that less spending means less tax revenue and that has an impact on public service spend.

Semenya says global risk factors such as the prohibitive cost of energy due to the Ukraine crisis and the increasing impact of climate change means South Africans will have to get used to living in an increasingly global risky environment over which they have little control.  From a business perspective she says risk managers need to run more planning scenarios; develop more robust risk management plans and interrogate more closely high-risk areas including contractual and project costs, political and environmental uncertainty and staff retention and stability.

ENDS

MEDIA CONTACT: Kobus de Wet, kobusd@irmsa.org.za ; 072 882 0888

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