EDITORIAL: Slow death for SA?
It’s starting to look as if SA’s lockdown was a huge overreaction — one that is going to cause more lasting economic damage than any harm the virus could mete out
It’s starting to look as if SA’s lockdown was a huge overreaction — one that is going to cause more lasting economic damage than any harm the virus could mete out.
As this view begins to percolate, bolstered by new modelling and international evidence, support for SA’s sometimes arbitrary lockdown rules is evaporating. It’s clear our tortuous, rung-by-rung approach to reopening is bankrupting the economy. The more protracted it is, the worse the damage will be. Yet with daily Covid-19 infection rates now topping 400, SA seems fated to take a glacial approach.
At this rate, SA will experience a gaping R285bn revenue hole this year, says the SA Revenue Service. Corporate tax collections and excise duties both halved in April, with the loss on alcohol and cigarettes alone amounting to R1.7bn.
The Treasury shows that while a three-week lockdown and rapid reopening would have caused the economy to contract by 5% this year, a very slow reopening could cause growth to plunge by 16%, costing around 1.7-million jobs.
Yet, last week, trade & industry minister Ebrahim Patel dismissed economic estimates as mere "thumb-sucks", and expressed hope in a V-shaped recovery.
SA won’t bounce back fast if it can’t keep businesses alive and undertake pro-growth reforms. Right now, our best hope is for a U-shaped recovery, taking several years. At worst, it could take a decade.
SA must allow all firms to open that can safely do so. It’s the right thing to do.