Johannesburg - Britain’s possible departure from the European Union could shave about 0.1 percentage point off South Africa’s economic growth due to the nation’s strong trade ties with the UK and European Union, according to researchers from North-West University.
“With current growth in South Africa in 2016 expected to be close to zero, it is a loss in growth South Africa can ill-afford at this stage,” Raymond Parsons and Wilma Viviers, professors at the business school and trade research unit at the university in Potchefstroom said in an e-mailed statement.
“Slower economic growth as a result of potentially weaker trade and investment ties with traditional overseas markets means less job creation and yet higher unemployment.”
South Africa's economy contracted by 1.2% in the three months through March as mining production slumped due to low commodity prices and farming output declined amid the worst drought in more than a century.
The central bank’s projected growth of 0.6% for this year will be the slowest pace since a 2009 recession and the 26.7% jobless rate is the highest in at least eight years.
The rand is among emerging-market currencies most vulnerable to upheaval if Britain votes on June 23 to leave the EU, according to a ranking of countries in central Europe and Africa based on the depth of their financial ties with UK banks, compiled by UniCredit SpA.
Bank of England warned this week the damage of the UK leaving the 28-nation bloc could extend to global markets and the world economy.
NOW READ: The UK will lose R2.3trn by 2020 if Brexit occurs. Leaving the EU would trigger a recession and set economic growth back by 6% by 2020, a report from the Economist Intelligence Unit has revealed. The story has graphs to illustrate how Brexit will affect various aspects of the British economy.