Just a week ago, Mary Muthui was selling dozens of football scarves, beanie hats and vuvuzelas every day from her stall at the Rosebank Mall crafts market in northern Johannesburg. But on Tuesday – just two days after the end of South Africa’s World Cup – the 28-year-old was struggling to sell anything at all and her prices had been steeply reduced.
The standard vuvuzela – a plastic flute painted in South African colours – could be bought for only R60, less than half than it would have cost when the cup competition was in full fling. “They were very popular,” explained Ms Muthui. “I got them from the Ethiopian traders in town and they brought them in from China.”
Next door, Lindiwe Ncube, 39, was even more desperate to unload her stock of vuvuzelas, offering the same basic model for only R30. A more expensive horn, painstakingly decorated in glass beads, was available for R150, just under half of what it would have sold for last week when crowds of Dutch, German and Spanish football fans were still in the country.
A few hundred years away the street traders who for months had made reasonable money by selling flags and side window covers in national colours at the corner of Glenhove Avenue and Oxford Street had disappeared. But the sudden exit of tourists – more than 300,000 came to watch 64 football matches over the course of a month – is not the only reason that South Africa’s economy is feeling something of a post-World Cup hangover.
Broader international economic trends are also not helping the country, with the slowdown in government World Cup spend coinciding with signs of a fall in manufacturing production and a decline in demand for raw materials.
During 2008 and 2009, demand from China and India for iron ore, coal and precious metals and government spending on the stadiums, roads and infrastructure related to the World Cup cushioned the impact of the global financial crisis. And in the first half of this year, local factories increased output quite quickly, with gross domestic product rising by 3.4 per cent in the 12 months to the end of the second quarter compared to the same period in the previous year.
More recently, there have been signs of a renewed slowdown in overseas demand for South Africa’s manufactured products. The purchasing managers’ index – a good indication of such demand – has fallen for three months in a row and broader output is dipping. Worse still, Chinese interest rate hikes could reduce demand for South African iron, coal and precious metals.
“The second half of the year will not be as strong as the first,” says Annabel Bishop, economist at Investec, the bank, who is predicting expansion of 2.8 per cent for the year as a whole.
Economists such as Ms Bishop are still relatively upbeat about the impact of the World Cup but insist that South Africa will have to wait some time to see the fruits of its investment.
That is mainly because it has improved international perceptions of South Africa, with the well organised and crime-free football spectacle making the country as a whole more attractive to tourists and foreign investors. Ms Bishop also said that the recent displays of national unity and social cohesion could feed through into a more permanent improvement in race relations.
At the same time, South Africa is still in a much better position than many of its developed country counterparts. World Cup infrastructure spending was considerable but the country’s debt levels are still relatively modest, with debt as a percentage of GDP amounting to only 32 per cent. That means that the country still has plenty of leeway to continue investing in its transport and energy infrastructure, funding that should in the wrong run improve overall economic productivity and allow for faster growth.
Such improvements, however, will take time and are little consolation for the hard-pressed Rosebank traders. “We can’t complain,” said Ms Muthui, staring at a sad pile of England, Italian and Brazil football favours. “I just wish it could continue.”