FISCAL POLICY IN SOUTH AFRICA: CLOSED INPUT-OUTPUT INCOME AND EMPLOYMENT MULTIPLIERS

The research paper calculates fiscal multipliers for South Africa using a closed input-output model based on 2018 data. It finds that the average income multiplier is 1.68 and the employment multiplier is 6.9, suggesting that public spending has a significant positive impact on GDP and job creation. The authors argue that the South African government's 2020 Budget, which proposes spending reductions of approximately R48 billion, will likely reduce GDP by R81 billion and destroy approximately 330,000 jobs due to these high multipliers and the existing negative output gap.

• The estimated average income multiplier for South Africa in 2018 is 1.68, meaning R1 billion of extra spending generates R1.68 billion in extra income.
• The average employment multiplier is 6.9, indicating that an increase of R1 million in expenditure leads to the creation of approximately 7 jobs.
• Including both induced consumption and induced investment effects raises the income multiplier to 1.87, while considering only the induced consumption effect results in a multiplier of 1.50.
• The authors predict that the proposed R48 billion reduction in public spending in the 2020 Budget will reduce South Africa's GDP by R81 billion between 2020 and 2022, representing a decline of about 0.5 percentage points.
• The 2020 austerity measures are projected to result in the loss of approximately 330,000 jobs.
• South Africa's economy is characterized by a significant negative output gap, with actual growth (0.4-0.8% per annum) consistently lower than potential growth (estimated at 1.9%-2.3%).

APA

Schröder, E., & Storm, S. (2020). FISCAL POLICY IN SOUTH AFRICA: CLOSED INPUT-OUTPUT INCOME AND EMPLOYMENT MULTIPLIERS. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2020/04/Multipliers-for-income-and-employment-Research-note-IEJ-1.pdf

Chicago

Schröder, Enno, and Servaas Storm. FISCAL POLICY IN SOUTH AFRICA: CLOSED INPUT-OUTPUT INCOME AND EMPLOYMENT MULTIPLIERS. Institute for Economic Justice, 2020. https://iej.org.za/wp-content/uploads/2020/04/Multipliers-for-income-and-employment-Research-note-IEJ-1.pdf.

Wikipedia

{{cite report |last1=Schröder |first1=Enno |last2=Storm |first2=Servaas |title=FISCAL POLICY IN SOUTH AFRICA: CLOSED INPUT-OUTPUT INCOME AND EMPLOYMENT MULTIPLIERS |publisher=Institute for Economic Justice |date=3 March 2020 |url=https://iej.org.za/wp-content/uploads/2020/04/Multipliers-for-income-and-employment-Research-note-IEJ-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{schrder2020fiscal, author = {Schröder, Enno and Storm, Servaas}, title = {{FISCAL POLICY IN SOUTH AFRICA: CLOSED INPUT-OUTPUT INCOME AND EMPLOYMENT MULTIPLIERS}}, institution = {Institute for Economic Justice}, year = {2020}, month = mar, url = {https://iej.org.za/wp-content/uploads/2020/04/Multipliers-for-income-and-employment-Research-note-IEJ-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }