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  • SA Economist Plots Three Different Scenarios For When Lockdown Ends

    07 Apr 2020 by Jasmine Stone in Health, Lifestyle, South Africa
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    [imagesource: Ashraf Hendricks / GroundUp]

    Before we go any further, we should mention that, as things stand, nobody really knows what the future holds.

    The situation is evolving daily, and different countries around the world are at varying stages of dealing with the pandemic.

    For a worldview on what might happen after lockdown ends, see our story from yesterday, but let’s turn attention to South Africa.

    Development economist Prof Danie Meyer, director of the TRADE research focus area at North-West University, has plotted three scenarios for what happens to our economy when our national lockdown ends.

    At present, our 21-day lockdown is due to end at midnight on April 16, but there is scope for the government to extend beyond that date, if deemed necessary.

    Meyer’s best-case scenario below, outlined via the Citizen, is if the pandemic is contained when April 16 rolls around:

    Everything returns to normal on April 17, with schools and universities reopening, all workers returning and a resumption of business.

    Most of our major trading partners are still in a state of containment, although international shipping is taking place. Local businesses can trade at least locally. Businesses and the industry can meet local needs with “buy local” campaigns.

    The first, as well as second quarter, will show negative growth, in other words, a deep recession, with unemployment rising above the 30% mark and a number of businesses closing.

    Again, that is the best-case scenario, and I’m not sure that’s what we are on course for.

    In the middle, moderate scenario, the pandemic is only under control by mid-2020:

    The state of containment extends into May 2020 and society and businesses are only open to everyone from June 2020. Worldwide, the pandemic is not over yet, but under control. No international trips, but freight delivery is under way.

    By now, the recession in South Africa will have advanced to the third quarter. Unemployment rises to 40%, with many marginal businesses closing. The government is struggling to meet all its obligations and is asking for assistance from the IMF.

    As you can see, things are getting progressively worse at a rate of knots.

    Not to be too much of a downer, but we should also cover the worst-case scenario, where the pandemic is only under control by the end of 2020.

    Some would say even that may be a success of sorts, as flare-ups could continue until a vaccine is developed and readily available, but let’s just stick with Meyer’s scenario for now:

    The virus is not yet under control after a second state of containment in South Africa and things are only returning to normal by the end of the year.

    International travel only resumes at the beginning of 2021. The South African recession is now a deep depression and the academic year of the schools and universities is lost. The government is struggling to meet its debt obligations and salary payments. The IMF provides a lifeline with conditions linked to structural changes, including the reduction of the government’s wage bill.

    Unemployment is at more than 45% by the end of 2020, and large numbers of businesses have closed.

    The sad reality is that all three of those scenarios point to tough times ahead.

    For South African businesses that are struggling, here’s a comprehensive list of all the funds and relief measures available to try and see you through this period.

    Also, there has never been a more important time than now to support local business. Consider supporting your favourite proudly South African retailers by ordering goods from them online which will be delivered to you once the lockdown is over.

    That money you spend now could come in handy with regards to paying rent, and staff, over the coming weeks. It’s also worth reaching out to your favourite businesses and asking them if they are selling vouchers, or gift cards, which you can purchase now for use further down the line.

    Somebody special has a birthday coming up in June? Great – buy that voucher now, lend a helping hand to a business owner who may be struggling, and that’s one less gift to worry about down the line.

    [source:citizen]

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