The Implications of the Global Economic Crisis for Industrial Sectors in South Africa

Research Report. Centre for Poverty Employment and Growth, Human Sciences Research Council

Throughout 2008 it seemed that the effects of the growing global financial crisis were largely passing South Africa by. By comparison with many developed countries, its financial sector and to a large extent its economy remained strong. However, from the start of 2009, the second-round effects began to affect the economy, through substantially reduced international demand and the availability of capital. This created knock-on impacts domestically, and firms are increasingly feeling the effects. This paper was prepared as part of a series on the economic and employment impacts on SA of the 2008 global financial crisis. It provides an analysis, based on preliminary data, of how the crisis affected key sectors of the South African economy. It presents a snapshot of the situation of each sector in April 2009, and draws out the likely vulnerabilities in each industry should the crisis continue to deepen. Although there are vulnerabilities in the economy, some of the worst-affected sectors (for example textiles and mining) faced considerable difficulties before the crisis began. This suggests that support in these areas should be targeted at addressing long-term problems in each industry, rather than simply providing money to struggling firms in the short run.