SOCIO-ECONOMIC REVIEW AND OUTLOOK 2021 Gauteng Provincial Government Socio-Economic Review and Outlook 2021 The Socio-Economic Review and Outlook, 2021 is compiled using information from different sources. Some of this information is subject to revision. To obtain additional copies of this document, please contact: The Head Official of Treasury Gauteng Provincial Government Private Bag X091, Marshalltown, 2107 Tel: 011 227 9000 Fax: 011 227 9023 This document is also available on website: www.treasury.gpg.gov.za PR54/2021 ISBN: 978-0-621-49216-3 iv Socio-Economic Review and Outlook 2021 Foreword The Socio-Economic Review and Outlook (SERO) publication provides an in- depth analysis of socio-economic variables for the world, South Africa, Gauteng Province and its municipalities. This 14th edition of the SERO is presented against the backdrop of the COVID-19 pandemic which has resulted in great losses in economic output, alongside the many lives lost to the pandemic globally. The International Monetary Fund (IMF) estimates that global economic growth contracted by 3.5 per cent during 2020, severely affecting women, youth, the poor and the informally employed. On the global front, several countries have begun inoculation programmes, Nomantu Nkomo- Ralehoko following successful clinical trials of various vaccines. The global economy is MEC For Finance forecast to rebound by 5.5 per cent in 2021. Growth in advanced economies is projected to increase by 4.3 per cent in 2021, while that in emerging markets and developing economies is expected to increase to 6.3 per cent in 2021, as they recover from a period of severe economic disruptions. Although progress in vaccination programmes have raised hopes of a turnaround in the pandemic later this year, renewed waves and new variants of the virus pose concerns for the outlook. The National Treasury forecasts the South African economy to rebound by 3.3 per cent this year, following a 7.2 per cent contraction in 2020. The sharp decline in growth has led to a signifi cant increase in unemployment. Poverty is on the rise and inequality is deepening. In his State of the Nation Address (SoNA), President Cyril Ramaphosa articulated that government plans have had to be adapted in response to the global pandemic, with budgets being reprioritised and many programmes deferred. Fundamental to our nation’s recovery is an unrelenting and comprehensive response to overcome the coronavirus. The sentiments of the President were further echoed by Premier David Makhura in his State of the Province Address. The provincial government, across all levels, will now focus on four priorities in 2021, which are; Overcoming the COVID-19 Pandemic; Re-igniting the Gauteng Economy; Recalibrating Social Policy, and Improving Governance. The objective is to ensure a successful roll out of the COVID-19 vaccination plan, which will enable the province’s economy to fully reopen. The Growing Gauteng Together 2030 (GGT2030) strategy remains the key policy document of the province and reforms outlined in the Gauteng Economic Recovery Plan, will accelerate the economic recovery and improve public fi nances to a sustainable position. In tabling the 2021 National Budget, the Minister of Finance, Tito Mboweni presented a fi scal framework that provides support to the Economic Reconstruction and Recovery Plan, and public health services, while ensuring the sustainability of public fi nances in the medium term. This includes effective tax reductions, to provide support for small, medium sized and large business enterprises. The budget also continues to provide support to the most economically vulnerable, through extending the special Covid-19 social relief of distress grant until the end of April 2021, and increases in social welfare spending to protect children, the disabled and the elderly. The National Treasury has allocated more than ZAR10 billion for the purchase and delivery of vaccines over the v Socio-Economic Review and Outlook 2021 next two years. The SERO will continue to provide informative, in-depth analyses of the province’s socio-economic issues. This year’s publication assesses the impact of the COVID-19 pandemic and comprises four chapters. Chapter 1 assesses how the pandemic affected key developmental priorities such as health care, poverty, inequality, and the labour market across various regions globally. Chapter 2 analyses the domestic macroeconomic performance and presents some key economic variables which have characterised the contraction in economic activity in 2020. Chapter 3 highlights key economic developments emanating from the pandemic and the implications that these developments hold for the socio-economic status and service delivery efforts in Gauteng. Chapter 4 considers the challenges and the impact of COVID-19 on the economic and social conditions in Gauteng municipalities. I conclude by thanking the Acting Head of the Gauteng Provincial Treasury, Mr Mncedisi Vilakazi and his team for their work in developing the 2021 SERO. Nomantu Nkomo-Ralehoko MEC for Finance vi Socio-Economic Review and Outlook 2021 Table of Contents Foreword v List of Figures viii List of Tables ix List of Abbreviations x Executive Summary xi Chapter 1: Global and National Socio-Economic Review 1 1. Introduction 1 2. The COVID-19 Outbreak 1 3. Regional Implications of COVID-19 3 4. Vaccine Development and Economic Outlook 9 5. COVID-19: Opportunities and Lessons for the Future 9 6. Conclusion 10 Chapter 2: Gauteng’s Socio-Economic Review 11 1. Introduction 11 2. Macroeconomic Developments in the Context of COVID-19 11 3. Socio-economic Developments in the Context of COVID-19 16 4. Policy Response to COVID-19 20 5. Conclusion 23 Chapter 3: Gauteng Economic and Socioeconomic Review 24 1. Introduction 24 2. Macroeconomic Developments in the Context of COVID-19 24 3. Socio-economic Developments in the Context of COVID-19 30 4. The Impact of COVID-19 on Revenue Collection and the Ability to Provide Basic Services 36 5. Gauteng Recovery Beyond COVID-19 37 6. Conclusion 40 Chapter 4: Municipal Economic and Socioeconomic Review 41 1. Introduction 41 2. Economic Developments in the Context of COVID-19 41 3. Socio-economic Developments in the Context of COVID-19 54 4. The impact of COVID-19 Pandemic on Revenue Collection and the Ability to Provide Basic Services 64 5. Conclusion 65 vii Socio-Economic Review and Outlook 2021 List of Figures Figure 1.1: COVID-19 Cases and Deaths for Selected Countries as at 25 January 2021 2 Figure 1.2: COVID-19 Cases and Recoveries as at 25 January 2021 2 Figure 1.3: The Number of Extremely Poor People Living on Less than USD1.90/day 4 Figure 1.4: Working Hours Lost and FTE in 2020 6 Figure 1.5: Budget Deficit as a Share of GDP for Selected Regions 7 Figure 1.6: Annual Percentage Change in World Trade Volumes 8 Figure 1.7: Foreign Direct Investment Inflows by Region 9 Figure 2.1: GDP Growth Rate 11 Figure 2.2: Sector Output Growth, 2020Q1 – 2020Q3 12 Figure 2.3: Real Investment 13 Figure 2.4: Consumer Price Inflation, 2009 – 2020 14 Figure 2.5: South Africa’s Working Age Population Characteristics 15 Figure 2.6: South Africa’s Labour Market Rates 15 Figure 2.7: Population Distribution by Age and Gender, 2010 – 2020 16 Figure 2.8: Selected Demographic Indicators 17 Figure 2.9: Highest Level of Education: Age 20+ 18 Figure 2.10: Share of People Living in Poverty in South Africa 19 Figure 2.11: Income Inequality as Measured by Gini Coefficient 20 Figure 2.12: South Africa’s Government Main Budget 21 Figure 3.1: The Size of the Gauteng Economy 24 Figure 3.2: Real GDP Growth Rate 25 Figure 3.3: Output Growth of Industries of Top 3 Sectors Severely Affected by COVID-19 Restrictions 26 Figure 3.4: Growth in Fixed Investment and Sector Contribution to Growth 27 Figure 3.5: Year-on-Year Gauteng Headline Infl ation 27 Figure 3.6: The Official Unemployment Rate by Age Group 28 Figure 3.7: Population Growth Rates 30 Figure 3.8: Gauteng Population Pyramid, 2020 31 Figure 3.9: Average Provincial Fertility Rates 31 Figure 3.10: Gauteng Life Expectancy Rates by Gender for 5 Year Periods 32 Figure 3.11: Provincial Migration Patterns 33 Figure 3.12: Education Attainment for People Aged 20+ Years and Literacy Rates 34 Figure 3.13: Poverty Headcount vs GDP Per Capita and Poverty Gap Rate 35 Figure 3.14: Income Inequality as Measured by Gini Coefficient Index 36 Figure 3.15: Key Action Areas of Gauteng Provincial Recovery Plan 38 Figure 4.1: GDP Growth Rate 42 Figure 4.2: Sector Output Growth, 2020 43 Figure 4.3: Growth in Fixed Investment 44 Figure 4.4: Labour Characteristics – Official Definition 45 Figure 4.5: GDP Growth Rate 47 Figure 4.6: GDP Growth Rate 48 Figure 4.7: Sector Output Growth, 2020 49 Figure 4.8: Sector Output Growth, 2020 50 Figure 4.9: Growth in Fixed Investment 51 Figure 4.10: Growth in Fixed Investment 52 Figure 4.11: Population Age Distribution of Metros, 2007 and 2020 55 Figure 4.12: Mortality Rate 55 Figure 4.13: Highest Level of Education Attained 56 Figure 4.14: Poverty Rate and Gini Coeffi cient (Income Inequality) 57 Figure 4.15: Population Age Distribution of Sedibeng and Local Municipalities 58 Figure 4.16: Estimated Number of AIDS 59 Figure 4.17: Highest Education Attained by Population Aged 20+ 60 viii Socio-Economic Review and Outlook 2021 Figure 4.18: Population Age Distribution of West Rand and Local Municipalities 61 Figure 4.19: Estimated Number of AIDS Deaths 62 Figure 4.20: Highest Education Attained by Population Aged 20+ 62 Figure 4.20: Poverty and Inequality Rates in Sedibeng