DUMA GQUBULE: A basic income grant should form part of economic strategy for a depression
A dignity floor is needed, below which no-one should fall during global crises
In his most recent address to the nation, President Cyril Ramaphosa failed to announce any new measures to counter the devastating effect of the lockdown on an economy that in 2020 could experience its largest annual decline since the Great Depression of 1929-1933. Depending on the length of the lockdown, SA could have a depression in 2020 with a GDP decline that is more than the 10.6% recorded in 1931 if there are no new stimulus measures.
A report by accounting firm PwC has painted three chilling scenarios for the SA economy during 2020. According to the “mild” scenario, a one-month full lockdown and gradual recovery over the rest of the year will result in the economy tanking by 8.4%. The “severe” scenario, a three-month full lockdown and a gradual recovery, will result in a 20.4% drop in GDP. This would be more than the 14.2% GDP decline in 1921.