Evaluating and Predicting the Long-Term Impact of the COVID-19 Pandemic on Manufacturing Sales within South Africa

Abstract

Manufacturing sales forecasting is crucial for business survival in the competitive and volatile modern market. The COVID-19 pandemic has had a significant negative impact on the demand and revenue of firms globally due to disruptions in supply chains. However, the effect of the pandemic on manufacturing sales in South Africa (SA) has not been quantified. The progress of the country’s manufacturing sector’s recovery after the pandemic remains unknown or unquantified. This paper uses a Box–Jenkins approach to time series analysis to produce long-term forecasts/projections of potential manufacturing sales, thereby quantifying the effects of the pandemic shock when the projections are compared with actual manufacturing sales. The Box–Jenkins approach is chosen because of its credibility and ability to produce accurate forecasts. Long-term projections enable organisations to plan ahead and make informed decisions, develop successful recovery plans, and navigate through similar economic shocks in the future, thereby ensuring long-term business survival and sustainability of the manufacturing sector. The SARIMA (0,1,1)(0,1,1)12 model best fits the SA manufacturing sales data according to the Akaike information criterion (AIC) and Bayesian information criterion (BIC), as well as the root mean square error (RMSE) and the mean absolute error (MAE). The results indicate that SA’s manufacturing sector was negatively impacted by the COVID-19 pandemic from about April 2020, but by November 2020 manufacturing sales had recovered to levels similar to projected levels had the COVID-19 pandemic not occurred. Long-term forecasts indicate that SA manufacturing sales will continue to increase. The manufacturing sector continues to grow, leading to increased employment opportunities and a boost to the gross domestic product (GDP).