Economists often define many aspects of macroeconomic objectives that are used to

measure the country's economic efficiency and serve as the fundamental purpose of
macroeconomic policy. Economic growth is essential for economic development and
can only occur if the country's policy planning accepts certain measures that would
secure the economy's sustainability. Ideally, all of the country's factors of production,
notably labour, should be fully utilized, resulting in low levels of unemployment or, as
some would put it, full employment. Price stability implies that prices in the economy
do not change over time. Balance of payments equilibrium states have more money
flows enter the country than going out we could have a surplus in the balance of
payments. Equity in distribution ensures that benefits are delivered properly and that
all members of the economy have an equal opportunity to accumulate wealth. In
general, a balanced budget refers to a budgeting process in which total projected
income match total planned expenses. As a result, this essay will examine the South
African economy's performance since the commencement of the COVID-19
epidemic by comparing the performance prior to the start of the pandemic and now
within the pandemic.
ECONOMIC GROWTH
Ever since the pandemic began a lot of changes were put into effect in regard to the
economy of the country, starting with economic growth. In a developing economy,
total goods and services output is projected to rise from one period to the next. If the
population continues to expand and the economy continues to develop, the average
living standard will not be able to rise, nor will it be feasible to produce enough
employment to accommodate the rising population, which is what South Africa's
economy has been attempting to solve. South Africa's real GDP increased by 0.2 %
in 2019. World economy remained moderate in the first quarter of 2019, falling to 2.8
percent as economic activity deteriorated in both advanced and developing markets
nations. South Africa's real economic growth decreased by an annualized 0.6
percent in quarter three of 2019, after recovering by a slightly revised 3.2 percent.
The deterioration was broad-based, with real gross value added (GVA) contracting in
both the primary sector and secondary sector, while production progress in the
tertiary sector slowed significantly.
In the third trimester, increase in real gross domestic product (GDP) was only 0.1
percent. Forecasts for South Africa's real GDP growth in 2019 have been revised
downward, estimates from the International Monetary Fund (IMF), the National
Treasury, and the South African Reserve Bank (SARB) have ranged between 0.5
percent and 0.7 percent in recent months. all of which are less than the
0.8% achieved in 2018. However, when COVID-19 emerged in 2020, the epidemic
and the virus-containment measures put in place to reduce the spread wreaked
havoc on the economy. Real GDP decreased by 8.2 percent in 2020, construction,
transportation and communication, manufacturing, and mining have all declined as a
result of the downturn. Overall demand components declined, with investment
diminishing the steepest (32.4 percent). The South African Reserve Bank decreased
the policy rate by 2% in 2020 to assist firms and people, however this resulted in the
economy amassing greater debt. This led to the increase of domestic credit to the
private sector.
The three primary credit rating agencies demoted South Africa's domestic and
foreign currency credit ratings to sub investment level due to the country's current
economic woes. Because of the intensity of the pandemic and residual challenges of
human progress has been weak, and social indices have remained inadequate. In
2021, real GDP growth is forecast to rebound to 3.0 percent, but the rate of recovery
has slowed as of 2022 owing to ongoing structural restrictions such as intermittent
energy supply and job rules. However, despite the fact that the economy is not doing
as well as it could, there are evidence that the South African economy has the
potential to develop and exceed expectations over time.
LOW LEVELS OF UNEMPLOYMENT
As a macroeconomic goal, full employment implies that unemployment should be
maintained to a minimum since it poses a major danger to social and political
stability. One goal of economic growth is to offer more job possibilities for a rising
population, but economic expansion does not ensure full employment, with the effect
on the pandemic and the economic growth seeing it decline led to a major decline in
employment and South Africa. The official unemployment rate in South Africa grew
somewhat more in the third trimester of 2019 to 29.1%, the maximum level since the
Quarterly Labor Force Survey (QLFS) began in 2008. In the third quarter, the
number of jobless South Africans reached an all-time high of 6.73 million, boosted by
additional large rises in the number of job losses as well as long-term unemployed
persons joining the labor market and actively looking for work.
South Africa's unemployment rate averaged 26.46%, but in 2021 it reached an all-
time high of 35.30%, not only because of the pandemic, but also because of political
unrest and looting of South African citizens that occurred in the previous year, which
resulted in more people losing their jobs. The official sector lost 571 000 jobs,
followed by agriculture and private households, which lost 32 000 and 65 000 jobs,
respectively. In the third quarter of 2021, informal employment grew by 9 000. When
compared to the third quarter of 2020, total household surveyed employment fell by
around 409 000 (-2.8%). The civil disturbance had a detrimental impact on the QLFS
response rate in the third quarter of 20213, which may have overstated the
magnitude of employment losses.
Workers with permanent employment contracts saw the greatest year-on-year fall in
employment (745 000) in the third quarter of 2021, followed by those with limited-
term contracts (24 000). Employees with undetermined contracts, on the other hand,
surged dramatically by 337 000. The young unemployment rate (those between the
ages of 15 and 24 who are actively looking for work) grew from 64.4 % of 2021 to
66.5% in the third quarter. In 2019, total employment fell by 34.2 %, but in 2020, total
employment fell by 34.2 %. Following the growth in the not economically active
population, the labor force participation rate fell from 57.5 % of 2021 to 55.2% in the
third quarter, illustrating the impact of civil unrest. Over the same time period, the
labor absorption rate – which measures the percentage of the working population
(aged 15–64) that is employed fell from 37.7% to 35.9%, in accordance with the
steep drop in employment.
The stagnant employment recovery following COVID-19's initial breakout
encountered a halt in the third quarter of 2021, when total household-surveyed
employment declined significantly. Along with broad-based job losses, formal
employment dropped precipitously.

The civil upheaval in Gauteng and KwaZulu-Natal in July likely had an influence on
this outcome. The Quarterly Labor Force Survey (QLFS) response rate was also
drastically reduced. The formal non-agricultural sector's labor productivity growth
increased significantly, from 3.0% in the first quarter of 2021 to 18.2% in the second
quarter, as the strong year-on-year increase in production exceeded the decline in
employment. On the other hand, in the formal non-agricultural sector, the change in
nominal unit labor cost reverted from a year-on-year gain of 0.6% in the first quarter
of 2021 to a fall of 6.8% in the second quarter. Changes in labor productivity and
nominal unit labor cost are mostly due to base effects from the economy. The
second quarter of 2020, when the COVID-19 had a substantially greater influence on
production rather than employment and compensation, there are lockdown limits.
PRICE STABILITY
Price stability does not entail that all prices must be constant; rather, it seeks to keep
inflation as low as reasonably achievable. The headline from the SARB is as follows
CPI inflation is expected to average 3.4% in 2020, 4.4% in 2021, and 4.1% in 2022.
Core inflation is expected to average 3,5% in 2020, 3.8% in 2021, and 4.1% in 2022.
As a result, the rand's value has depreciated. In recent months, domestic inflationary
pressures have grown, with both headline consumer and final manufactured
producer price inflation increasing to levels beyond the inflation target range's
midpoint. This was mostly due to an increase in the cost of fuel and raw materials, as
well as higher food and power prices. The most significant increase in intermediate
manufactured producer goods costs thus far in 2021 was the sharp rise in the prices
of fabricated iron and steel, as well as chemicals and plastics.
Most other indices of producer price inflation have accelerated in 2021 as well. In
September, both electricity and water price inflation increased to 23.3%, with
producer electricity price inflation contributing 22.6 percentage points and water price
inflation contributing only 0.7% points. Due to rising prices of agricultural items,
notably crops and horticulture, as well as milk, eggs, and other animal products,
producer price inflation for agriculture, forestry, and fishery products originally
accelerated to 13.3% in June 2021. After that, the pace of rise slowed to 8.6% in
October 2021. Output price inflation for mining goods nearly doubled from 10.8% in
April 2021 to 20.6% in June, owing to price rises in non-ferrous metal ores, coal, and
gas products. Following that, the pace of rise slowed to 4.8% in October 2021, owing
to diminishing base effects and the late-cycle decline in commodity prices.
In November 2021, the Food and Agriculture Organization (FAO) of the United
Nations' Food Price Index climbed for the fourth month in a row. However, the year-
on-year growth rate has slowed from a peak of 40.6% in May to 27.3% in October.
The monthly rise in November 2021 was driven mostly by increasing grain and dairy
costs, while meat and vegetable oil prices fell somewhat. Cereal price inflation
remained high in November 2021, at 23.2%. Wheat prices rose for the sixth month in
a row to their highest level since May 2011, owing to robust global demand and
limited supply. Maize and barley prices rose more in November 2021, but rice prices
stayed relatively stable. Despite rising international food prices, excellent global and
domestic harvest expectations bode well for limiting domestic consumer food price
inflation in the coming months. After falling to a multi-year low in February 2021,
underlying inflationary pressures rose gradually in the months that followed, but were
tightly managed within a climate of weak consumer demand. When food, non-
alcoholic drinks, and fuel costs are excluded from headline consumer prices,
underlying inflation rises from 2.8% in February 2021 to 3.8% in September and
October, reflecting a significant acceleration in power price inflation.
BALANCE OF PAYMENTS EQUILIBRIUM

BALANCED BUDGET
A budget may be certified balanced when a full year's worth of revenue and
expenses have been incurred and reported. It is a budget which does not have a
budget deficit but could have a budget surplus in general. Before the pandemic begin
South Africa had constantly been seeing a budget deficit that was somewhat
fluctuating around nearly the same figures. In 2020 the budget was extremely
exceeded which was expected because the pandemic hit and there were unforeseen
costs at hand which generally landed the country’s economy in debt, last year the
country’s budget saw a decrease meaning the costs had slightly decreased but it still
exceeded what was planned. A statistics graph has been demonstrated below with
figures and projected figures in terms of the South African balance budget in
correlation with the GDP.

EQUITY IN DISTRIBUTION
South Africa is the world's most unequal country, according to most modern criteria.
Nonetheless, little emphasis has been placed on the country's wealth imbalance. The
distribution of income is necessary for growth. since it influences social
cohesiveness, defines the degree of poverty for any given average per capita
income, as well as the poverty-reducing effects of growth, and even has an impact
on people's health. The distribution of income is fundamental to a long-standing
question in political economy: the extent to which the government should redistribute
money from those with more to those with less. However South Africa has and is still
facing an issue of unequal distribution of income, and it only gets worse.
Net household wealth in South Africa is exceedingly distributed unevenly: the top
0.01 percent (3,500 persons) own 15% of total national wealth, which is larger than
the lowest 90% of the adult population (32 million individuals). All types of assets are
unequally divided, with the top 10% owning 99.8% of bonds and shares, which
account for 35% of total wealth. Since the end of apartheid, there has been no
evidence of reducing wealth disparity, and current levels of concentration far surpass
wealth inequality estimates in other countries, this also applies to now during the
COVID-19 pandemic although it must highlight that there is a high rate of unequal
distribution of wealth/income, resource towards different marginal groups in South
Africa which makes them categorized as the poor and above the poverty line.
Net household wealth is likewise highly concentrated in the top 10%. The top 1% of
the South African adult population (350,000 people) owns 55% of total personal
wealth, while the top 0.1% (35,000 people) owns about a third of total wealth. The
poorest half of South Africa's population has a negative net worth: the amount of
debt they owe exceeds the market value of the assets they hold. The individual adult
aged 20 and up is the unit of observation. In 2017, the wealthiest 1% of South
Africans in terms of net worth controlled 95% of the country's bonds and corporate
shares. Bonds and stocks accounted for 34.1% of all household assets in the
economy at the time. Due to rounding, figures may not add up. Such levels of wealth
concentration have an impact on the economy by diminishing the representativeness
of democratic institutions, promoting anti-competitive market structures, and
depriving the poorest of the resources required to withstand shocks and reach their
full potential. Wealth inequality in South Africa is likely to remain unless robust
stabilizing mechanisms are put in place.
CONCLUSION
With all that has been discussed and outlined, the economy of South Africa was
steeply affected since the beginning of the pandemic. It was picking up prior to the
pandemic however this became a major setback, although with projection by
economists the economy has a chance to restructure and continue to grow and that
will take some time considering that loans were taken, jobs were lost, revenues were
lost.
QUESTION 2
1a). The war in Ukraine is going to affect a lot of countries with many changes soon
to be put in effect, one of those countries is South Africa. The situation in Ukraine
may be physically far from South Africa, but its repercussions may soon be felt by
local customers. If the Russian invasion of Ukraine, regarded by some as Europe's
worst hour since World War II, does not end soon, SA may face a squeeze from
increased petrol costs, as well as earlier and larger interest rate rises by the SA
Reserve Bank to combat inflation, and higher wheat prices. Furthermore, a drop in
demand for South Africa's commodities, as well as a "risk-off" mentality among
investors toward developing countries, might have an influence on the rand. "
Because oil is South Africa's most important import, the immediate impact on people'
pockets will be increased fuel costs.
Prior to the recent oil price increase, the fuel price was expected to rise by roughly
R1.25 per litre in the first week of March. This would raise the price of 95 octane fuel
in Gauteng to a record high of more than R21. However, due to the recent oil rush,
as well as a strong shock to the rand, the petrol price jump is now certain to be
substantially harsher. Although South Africa imports oil in dollars, the exchange rate
influences the price of gasoline. The rand fell by roughly 3% to R15.46 in the second
week of March. It was trading under R15 just a week ago. Higher gasoline prices
definitely disproportionately affect the poorest and can drive the proportion of poor
households' incomes spent on transportation expenditures through the roof. Both
Russia and Ukraine, like South Africa, are emerging markets, and investors often
avoid emerging countries when they are seen to be riskier. Furthermore, the conflict
may hamper economic development, lowering commodity demand. Because South
Africa is a significant commodities exporter, the rand may suffer as a result.
The Ukraine crisis will hinder global development, which has only recently recovered
from the Covid-19 lockdowns. This implies that demand for South African
commodities will be severely disrupted. Because Russia and Ukraine contribute for
25% to 30% of global wheat exports, grain prices may rise. Even before the Russia-
Ukraine conflict erupted, fertilizer costs were a source of concern for South African
farmers. In the medium term, South Africa may not be hurt by supply constraints, but
we will see an upside risk in food price inflation as it continues to add to the
worldwide price spike. It would be determined by the length of the war as well as the
magnitude of the trade interruption. Inflation in South Africa will rise as a result of
increasing fuel costs, higher wheat prices, and a weaker rand. When the price of
goods and services tremendously increases it causes a strain on households
especially the disadvantaged and the demand will eventually decrease. for that
particular good or service. We currently have a high unemployment rate in South
Africa meaning that not every individual has the purchasing power therefor the
economy will encounter a sour setback, less revenue and more expenses. The rand
will eventually get weaker by the surface.
b). The poor have greatly been affected by the pandemic as most lost their jobs,
businesses, shelters and source of income, they depended on the COVID relief fund
that the government had stipulated. However, with the war going on in Ukraine one
can say that it will arise and trigger a lot of issues including instability, With the high
prices of foods inflation rate will deprive many from accessing their most basic
needs. Food insecurity will arise which was once a global pandemic affecting mostly
African countries whereby hunger will occur and force the government and its
acquaintances to focus on that and spend excess money to alleviate that issue.
According to the National Income Dynamics Survey – Coronavirus Rapid Mobile
Survey (NIDS-CRAM), over 2.3 million families experienced child hunger in
April/May 2021, while an Ipsos study indicated that more than 40% of South Africans
of all ages were impacted by hunger.
With the current active inequality in the country a lot of black people will be most
affected as they are the leading race in terms of poverty in South Africa, with little job
opportunities already at hand they are about to become somewhat scarce.
Remember that if the demand for goods and service that a business is offering has
sufficiently decreased means that the business will not make money and eventually
has to let some if its employees go, assuming that most of them are people of colour.
With no incoming income the standard of living will get poorer by the day, could be
even worse if one was a breadwinner in their households and had kids who are in
school meaning their access to quality education will be affected with non-ending
expenses.