‘SA economy was bad before, but now it is much worse’

Economists have said that South Africa’s economy was in difficulty before the Covid-19 crisis and forecasts for the rest of the year are alarming.

The Centre for Development and Enterprise (CDE) said in a report that the Covid-19 pandemic and the measures taken to combat it were likely to leave all South Africans poorer for a long time.

Senior lecturer at UCT Neryvia Pillay Bell said: “We need to try to ‘freeze’ the economy so that it can restart quicker when we exit the lockdown.”

Bell said: “I think that we need to do as much as we can to provide assistance to businesses to ensure their survival and preserve employer-employee relationships during the lockdown.

“Moreover, I think we need a clear plan from the government on how we will move down the levels of lockdown and a commitment to make scientific-based decisions, rather than decisions that do not make any sense – like you can buy winter clothes but not underwear,” said Bell.

“In a crisis like this, the public needs to be able to trust the government. There was a great deal of trust during the initial weeks of the lockdown but that trust is fast eroding.”

The CDE report was written by the executive director of the CDE, Ann Bernstein, who said: “Unless South Africa emerges from the Covid-19 emergency with a real plan to accelerate growth dramatically and sustainably, it may come to be seen as the final nail in the coffin of our economic, social and political order whose unsustainability was already driving us towards a fiscal crisis.”

Bernstein said: “Millions face much-reduced living standards and an increase in levels of poverty and of absolute poverty. Though the job losses are doubtless concentrated among the most vulnerable, employment shocks are being felt all the way up the income distribution chain. Firms in some industries such as retail, tourism and leisure and media are being decimated, taking down not just their employees but their managers and owners too.

“A massive increase in unemployment and poverty is the last thing that South Africa needs,” said Bernstein.

Political analyst Ralph Mathekga said: “The rural areas have been neglected for too long. It is important to craft policies that speak to the economics of the rural communities. Uplifting rural South Africans will stem the rural urban migration, which can only assist in making the economy more stable, but they will have to change their attitude or find themselves on the wrong side of history.”