GDP could shrink as much as 12% due to coronavirus - treasury head
JOHANNEBSURG - South Africa’s economy could contract by as much 12% and unemployment balloon to more than third of the workforce due to the impact of the coronavirus, Director-General of the National Treasury Dondo Mogajane said in a radio interview on Monday.
“Anything between minus 7% up to 12% could be the impact (on GDP). We have to focus on the post-virus environment so we can contain the impact ... It’s gonna be huge,” said the head of treasury on talk radio station 702.
“We could even reach 40% unemployment if things go the way they are. The manufacturing industry is impacted. Mining is impacted. The services sector is impacted. Look at tourism for instance, it’s on its knees,” Mogajane said.
Trade, Industry and Competition Minister Ebrahim Patel has told parliamentary committees that South Africa need not remain at Level 4 of the Covid-19 lockdown for a specific number of weeks, but can move rapidly to a lower level should risks be mitigated.
The portfolio committee on trade, industry and competition, together with the select committee on trade and industry, economic development, small business, tourism, employment and labour, heard that should the country avoid a sharp increase in the levels of infection with the return to work of large numbers of workers and expanded testing and health-care facilities, the economy could shift to Level 3 as soon as possible.
South Africa has been under a five-week national lockdown, which was eased on Thursday, with the introduction of a five-level phased approach to easing the lockdown.
The country moved to Level 4 lockdown as of Friday, May 1. The lockdown was imposed by the government to curb the rapid spread of the coronavirus.
The committees heard that the initial return to work will be based on the national level, but will progressively be expanded to provincial and district level, enabling workplaces to adapt to the levels of infection and healthcare readiness in localities.
Patel emphasised that the Covid-19 pandemic will impact the economy deeply, due to the closure of many companies during Level 5.
REUTERS / BUSINESS REPORT ONLINE