Wed, 12 Aug 2020

SA business alliance expects 1 million job losses, economy to contract by 10%

B4SA was supportive of the measures the government took to slow the spread of the virus initially - but, by May, it had become more critical of the lockdown extension.

"The time for brave and decisive action is now and not next year. Tough choices must be made by all to create a sustainable future," added B4SA in its response.

The situation is already too dire

Economic data on how the lockdown has affected the country so far is slowly trickling in. The monthly data readings that the country have been able to produce, despite the movement restrictions, show that the impact on the economy has been very severe - with just over 10% of businesses permanently closed by the end of May and another 20% temporarily closed.

The SA Reserve Bank now predict that SA's GDP could shrink by 32.6% in the second quarter of 2020, and by 7.2% for the year as a whole. Investec, meanwhile, expects the economy to shrink by as much as -15%, a fall far more severe than the -1.5% experienced in 2009 in the aftermath of the global financial crisis

Industries like tourism and hospitality that were already bleeding jobs say they cannot endure a continuation of a strict lockdown for the next 100 days.

Tshifhiwa Tshivhengwa, CEO of the Tourism Business Council of South Africa, said the past 100 days may have been the worst the industry has had to endure, and the organisation could be headed to court to stop the continuation of that.

"If we are not considered [by the government] for reopening, we may have to consider our options and ways of forcing our government to open us up," said Tshivhengwa.

ALSO READ | There will be 'nothing left' of tourism industry if it can only reopen in December

We haven't seen even the full impact of the first 100 days

Even sectors, supposedly less affected by the lockdown because they were allowed to return to operations sooner, are counting losses, evident by their decision to withhold dividends for the period ended on 31 March, said retail analyst Syd Vianello.

Vianello said company results for the year or six months ending in 30 June will provide a clearer picture of the impact of Covid-19.

"There are hints of the poor numbers that you can glean from the retailers not declaring dividends. They are not declaring dividends because they know what happened in April and May.

"Obviously, when they were reporting in June, they also had an idea of what was happening in June. And...they are dead scared of what's coming in July," Vianello said.

He said, past the 100-day mark, things will get more dire, especially with the uncertainty of job security, the end of the Unemployment Insurance Fund's (UIF) Covid-19 Temporary Employer/Employee Relief Scheme (Ters) and the increase in Covid-19 numbers.

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