South Africa has eased further the lockdown imposed by the coVID-19 outbreak in a bid to save the economy as business returns to normal. But economists say it could take a long time for the economic impact of the outbreak and the lockdown to ease.
The South African government imposed the most stringent level five “lockdown” across the country on March 26 to slow the spread of the virus. During the lockdown, social activity almost completely stopped and the South African economy was severely hit. Even as the outbreak continues to simmer, the South African government has gradually eased controls in stages. Since January 1, 80 percent of businesses have returned to normal, and an estimated 8 million people have returned to work.
South Africa’s Finance ministry says 690,000 to 1.79 million people are expected to lose their jobs this year as a result of the outbreak and the lockdown. This is a marked reduction from the previous estimate released in April. This comes after official figures showed that between three million and seven million south Africans will lose their jobs this year.
South Africa’s central bank forecasts gross domestic product will shrink 7 per cent this year, the first contraction since 2009. The Federation of South African Businesses expects the economy to shrink by 8.8 percent to 16.1 percent this year.
Even before the outbreak, South Africa’s economy was in a technical recession. Since the outbreak, South Africa’s central bank has cut interest rates three times in a row, lowering its benchmark interest rate by 250 basis points to 3.75%. In terms of fiscal policy, the South African government has launched a total of 500 billion rand (about 17 rand per DOLLAR) of social assistance and economic support programs to help businesses and people weather the storm.
Statistics show that as of the beginning of this month, 6.5 million South Africans had applied for unemployment benefits, and the government had paid 15.8 billion rand for temporary unemployment due to the epidemic.
Cyril Ramaphosa, South Africa’s President, said the government would pay aid for six months but would then need to find new ways to stimulate the economy, shifting the focus of its economic policy from “aid” to “recovery”.
He said that in the future, South Africa will seek economic development under the coexistence of novel Coronavirus. The new development direction includes strengthening localized production of agricultural products and medical care products, developing green economy and vigorously developing infrastructure construction.