South Africa ‘won’t be spared’ from the Russia-Ukraine war: Ramaphosa


South Africa ‘won’t be spared’ from the Russia-Ukraine war: Ramaphosa

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South Africa risks being rocked by strong economic headwinds in the coming months as the “conflict between Russia and Ukraine” impacts the global economy, says president Cyril Ramaphosa.

Speaking at an event hosted by asset manager NinetyOne on Wednesday evening (16 March), Ramaphosa said the economic turmoil comes just as South Africa and other countries recover from the two-year-long Covid pandemic.

“Just as we have not been spared the economic impact of the global Covid-19 pandemic, so too will South Africa be affected by the conflict between Russia and Ukraine,” he said.

Ramaphosa and the South African government has refused to call Russia’s attacks on Ukraine an invasion or a war, with the country’s official stance being neutrality – calling for both countries to end hostilities.

“We are already seeing the impact of the conflict on global commodity prices and, should the conflict continue, we will see its effects on many parts of our economy and in the daily lives of our people. It is therefore vital that the international community work with the governments of Russia and Ukraine to end hostilities now and achieve a meaningful and lasting peace.”

Ramaphosa added that South Africa’s real GDP grew by 1.2% in the fourth quarter of 2021, taking the annual growth rate for 2021 to 4.9%.

This shows that the economy is recovering, with a further 2.1% increase in GDP expected this year. However, Ramaphosa said this growth rate is not enough to stem the country’s record-high unemployment rate.

“It is not enough to turn the tide on unemployment and to lift millions of South Africans out of poverty. That is why in this year’s State of the Nation Address, I called for a new consensus for growth and employment.

“We need to deepen our cooperation, build on progress in the implementation of the Economic Reconstruction and Recovery Plan, and focus our collective capabilities on unlocking the potential of our economy and our people.”

Data published by Absa this week shows the Russian invasion has led to higher oil and grain prices globally, which will directly push up prices of key goods within South Africa’s CPI such as fuel and bread.

In addition, sharply higher commodity prices could also lead to second-order inflationary effects, for example as public transport or food prices are increased to offset firms’ higher fuel costs.

The group said ongoing supply chain disruptions to semiconductor chips could also push up prices of cars, TVs and computers in the coming months.

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