South Africans spent the month of April under alert level 5 of the lockdown, faced with regulations that rank amongst the strictest in the world.
Given how unprepared large swathes of our healthcare sector were (and still are, in some key areas), acting quickly and decisively was necessary to buy us some time.
Sadly, as we have known from day one, the effect on South Africa’s economy has been brutal, and now that April’s data is out, the true extent of that can be seen.
Bloomberg’s Rene Vollgraaf with more:
The trade balance swung to a record deficit in April. That was mainly due to a 55% slump in exports as the lockdown stifled mining activity, which accounts for about half of the South Africa’s outward shipments, and as restrictions abroad weighed that demand from most trading partners.
It’s hoped that exports will increase significantly over the next few months, and if we remain at alert level 3, the second half of 2020 should see the trade balance remain positive:
Our credit-card purchases also plunged to a nine-year low in April, despite the central bank lowering borrowing costs.
“The economic fallout from the implementation of measures to contain the spread of the Covid-19 pandemic is envisaged to include job losses or salary reductions,” said Kamilla Kaplan, an economist at Investec Bank. “This will erode households’ ability to service debts.”
In graph form once more:
We’ve covered the incredible sales figures coming out of the country’s automotive industry before, and May’s numbers are predicted to continue the trend.
The National Association of Automobile Manufacturers of South Africa has reduced its domestic new-vehicle sales forecast by 23% to 405 000 units for the year, saying demand will continue to remain under pressure until there is greater economic stability.
Below are the sales figures for April compared with past months:
To finish, there is now a massive budget shortfall to deal with:
Business closures because of the lockdown and steps announced by the South African Revenue Service to give more time for tax payments to be made led to a budget shortfall of 52.1 billion rand in April, the first month of the government’s fiscal year.
While Finance Minister Tito Mboweni will only present an adjustment budget in late June, he has said the tax take could fall by 32%.
Crazy idea – allow the sale of tobacco products, with British American Tobacco SA (Batsa) estimating that each day of the ban sees R35 million in tax revenue lost.
Not a good look.
Tito Mboweni is going to have some balancing act in his next budget speech later this month.
At least there will be plenty of tax revenue generated through booze sales, with the queues outside some stores today showing a thirsty public.
[source:bloomberg]
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