By Chris Bishop
A million jobs lost and a contraction of GDP of between 8 and 10 per cent this year. This was the bleak picture of the South African economy painted by the business-driven action group in the front line of the battle against COVID-19.
South Africa’s economy has been struggling for the best part of a decade against problems compounded by the downgrade to junk by Moody’s on the first day of the country’s lockdown on March 28. It has made the country’s goal of around 5 per cent GDP growth – the figure needed to keep up with new employees coming into the job market – a mere pipe dream.
“Our view is there is going to be a very significant 8 to 10 per cent contraction in the economy for 2020 depending on the length and extent of the lockdown and also the lockdown in our trading partners. Capital flow is going to be restricted over the year…Shifts in commodity prices are also going to fuel the number of people going into the ranks of the unemployed. A million people added to the unemployment numbers is what we expect and we are looking at the appropriate safety nets that business can provide,” says banker Martin Kingston of Business for SA COVID-19 a group made up of Business Unit South Africa and the Black Business Council.
Business for SA said it was unclear how long the lockdown in South Africa may last or how it could be relaxed, but was in discussions about how money could be used to limit the damage.
“We are in discussions with banks about injecting liquidity into the system. Economic recovery, 2021 and beyond we are going to need more liquidity. We are also in discussions with the Reserve Bank about how to manage risk in the future,” says Kingston.
Stavros Nicolaou, who is heading up the health section for Business for SA, said the country would know in the next two weeks more about how serious the outbreak is going to be. It is equipped to carry out 25,000 tests- a-day.
“Ï think the next two weeks will give us a good measure of how the patterns are emerging,” says Nicolaou during the online briefing. He said 10,000 volunteers were working with the nationwide screening process.
Business for SA was also procuring 1.2 million gloves and six million surgical masks as well as looking to ease the import of much needed ventilators to help fight the pandemic.