BUSINESS DAY SPOTLIGHT
PODCAST | Economic news of the week: SA’s economy needs the lockdown to end now
We talk to Annabel Bishop, chief economist at Investec, about how the lockdown has done more damage to the economy than initially thought
In this edition of Business Day Spotlight we look at the week’s top economics news, events and data.
Our host Mudiwa Gavaza is joined by Annabel Bishop, chief economist at Investec to discuss the issues.
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It is widely expected that President Cyril Ramaphosa will soon announce a further loosening of lockdown restrictions to level 2 of the national lockdown, in place to stop the spread of the coronavirus, as the rate of infections has started to drop.
The discussion starts with Bishop explaining what the move to level 2 would mean for the local economy. She says it is a good thing that the country has reached a point where it is becoming more viable to open up other parts of the economy that have been unable to operate since late March. Level 3 has persisted for close to three months, after levels 5 and 4 were both month-long experiences, underpinned by the rise in infections since June.
She says a slowdown in infections may give the state confidence to ease restrictions with one of the major shifts being inter-provincial travel.
The conversation then turns to new economic data released this week.
Bishop says as more facts and figures are released by the country’s various agencies about the performance of various sectors during the lockdown, the reality is that the damage to SA’s economy over the past four months has been worse than initial projections.
SA is unlikely to see 2019 levels of economic activity until 2025, she says, explaining that a 73% contraction in industrial production, driven by weakness in manufacturing, mining and electricity production in the second quarter of this year will take a long time to recover from. Not all sectors are likely languishing. Agriculture, Bishop says, will see good growth, but even that will not be enough to offset losses from the wider economy.
On the whole, Bishop says there’s a lot of work to be done to get SA’s economy back on track. But as much as the Covid-19 crisis has highlighted all the things that are wrong, it does shed light on areas of policy and ease of doing business that can be improved, she says.
The discussion also touches on other data points for manufacturing, mining, industrial production, tourism, retail and motor vehicle sales; together with an outlook for GDP and the possible impact of load-shedding on the country’s ability to recover in the long term.
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