Assessment of fuel price, exchange rate and unemployment rate impact on road passenger journeys in South Africa

Abstract

The transportation sector is one of the sectors that contribute to the South African economy and its people’s well-being. This sector facilitates goods transportation and people’s mobility through air, water and land transportation. In recent decades passenger transportation journeys experienced a decline and this decline may due to various causes such as cost of transportation, low economic growth, exchange rate volatility, unemployment and petrol price. This study aimed to analyze the effect of petrol price, exchange rate and unemployment rate on on-road passenger journeys. The study applied ARDL and ECM models to data from 2008 to 2021 to examine how the variables above influence long-term and short behaviour in road passenger journeys. Findings revealed that, in the long run, all independent variables influence road passenger journeys. Yet, unemployment has more power over road passenger journeys than exchange rate and petrol price. Short-term dynamics reveal that only the exchange rate and unemployment influence road passenger journeys. The study recommends job creation, exchange rate strengthening and petrol subsidies to increase the number of road passenger journeys in South Africa.