SHUTDOWN CAN COST ECONOMY OVER E100M DAILY

MBABANE – A shutdown due to protests and riots can cost the country’s economy an estimated over E100 million daily.

The figure could rise even to over E178 million if all the businesses were to be closed in one day. Most parts of the country, including the capital city, came to a standstill this past Wednesday due to protests. What began as demonstrations in June and July escalated into violence, leading to dozens of deaths and destructions of businesses, mainly in the retail and wholesale space. The country has become synonymous with demonstrations since then.

Based on last year’s annual figures of over E65.4 billion, the country’s gross domestic product (GDP) figure for each day is around E178 million. Economist, Sanele Sibiya felt a raw estimate would be around E175 million per day assuming that each day produced the same amount of output. Analysts feel the country’s economy was headed for disaster if the unrest would drag longer. This is because key sectors of the economy that include manufacturing, transport, wholesale and retail are affected.

In the past year, manufacturing contributed the largest share 26.6 per cent to GDP. It was followed by wholesale and retail trade with 14.4 per cent and public administration and defence with 10.2 per cent. The least contributing industries were mining and quarrying, arts entertainment and recreation with 0.2 and 0.1 per cent respectively.

Meanwhile, the GDP for the year 2020 showed a decline of -1.9 per cent.  These figures were very low when compared to a revised growth of 2.6 per cent realised in 2019. The observed decline is mainly contributed by the secondary sector which declined by -9.8 per cent and the primary sector by -5.1 per cent. The daily economic output figures, on the other hand, could not be immediately ascertained, as data was not readily available. Economic output measures the value of all sales of goods and services.

World

According to the latest Global Peace Index (GPI), the number of riots, general strikes and anti-government demonstrations around the world has increased by a staggering 244 per cent in the last decade. Short to medium-term economic costs of social unrest can in fact be quite large, especially in emerging markets and developing economies.

The adverse impact of unrest is said to be typically larger in countries with weak institutions and limited policy space.  The economic impact of unrest also differs by the type of event. Analysts say protests motivated by socio-economic concerns result in sharper GDP contractions compared to those associated mainly with politics/elections. Demonstrations triggered by a combination of both socio-economic and political factors have the biggest impact.

“Public protests can be an important expression of the need to change policies. Governments need to listen and respond, but also try to anticipate people’s needs with policies aimed at giving everyone a fair shot at prosperity. Boosting employment, containing the long-term impact of the crisis and protecting those who have been left behind must remain priorities,” shared the International Monetary Fund (IMF) through a research paper. To ensure success and avoid strife, recent IMF staff research noted that reforms required a broad social dialogue on the role of the state and how to sustainably finance budget pressures.

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