South Africa’s unemployment rate has dipped in the first three months of the its new coalition government, boosting investors’ confidence.
The unemployment rate dropped to 32.1% in the third quarter of this year, the first time it would fall from the initial 33.5% rate in the second quarter. The reduction in unemployment comes after the formation of a coalition government in June this year.
The coalition government was formed after the African National Congress faltered in the last elections, losing its majority in parliament for the first time in 30 years. The election loss made the formation of a coalition government with the market friendly Democratic Alliance and other smaller parties.
The ANC’s loss was triggered by growing corruption in government, poor economic performance and the people’s anger towards growing crime and unemployment rate.
The formation of the coalition government spurred a wave of optimism among investors, rallying a surge in the Rand and South Africa’s local currency debt. The surge in South Africa’s currency was also aided by some economic reforms carried out by the government.
The reduction in unemployment rate has been largely driven by the creation of jobs in key sectors like manufacturing, construction, trade, agriculture, mining, social services and utilities.
Despite the reduction in the unemployment, South Africa still has the highest unemployment rates in the world while Black South Africans face the worst unemployment levels, lending credence to the country’s deep racial issues.
