Government signals allowing more sectors to open, giving sentiment a boost

THE LOCKDOWN restrictions were eased this month to allow restaurants to offer delivery and pick-up services. Leon Lestrade African News Agency (ANA)

THE LOCKDOWN restrictions were eased this month to allow restaurants to offer delivery and pick-up services. Leon Lestrade African News Agency (ANA)

Published Jun 17, 2020


JOHANNESBURG - The government on Monday boosted economic sentiment when it signalled that a decision to allow more sectors to open under the level 3 lockdown restrictions was likely to be implemented as early as this week.

Minister in the Presidency Jackson Mthembu said the country would know by the end of the week whether more sectors of the economy would be allowed to resume, giving hope to the markets.

Mthembu said the National Coronavirus Command Council and the Cabinet were expected to meet yesterday to consider requests by various industries to open their doors.

He said sectors such as restaurants, hair salons and leisure travel could be opened.

Africa’s most industrialised economy eased restrictions and opened more sectors from June 1 after 10 weeks of a harsh lockdown to curb the spread of the virus.

The command council was expected to receive a report from the medical advisory committee, which advises Health Minister Dr Zweli Mkhize on the pandemic.

Mthembu told a regional radio station that key decisions would be made this week. “They will advise us on those issues and all these matters will come for discussions.”

The hospitality industry has incurred massive losses from the government’s restrictions on gatherings of more than 50 people and a ban on in-house dining.

This month, the government eased the restrictions to allow for delivery and pick-up services.

FXTM’s Lukman Otunuga said there was optimism that the worst of Covid-19 could be behind South Africa as the economy progressed to “advanced level 3 lockdown” and slowly got back to work.

Otunuga said that the opening of more sectors such as sit-in restaurants would offer a morale boost and even stimulate consumption which accounts for a chunk of GDP that was forecast to shrink 5.5percent this year.

“However, it remains uncertain when the lockdown will completely end, especially considering a resurgence of coronavirus cases in China and parts of the US,” Otunuga said. “Fears over a second wave of the coronavirus threatening global stability and growth may trigger widespread risk aversion, ultimately hitting emerging markets like South Africa.”

Otunuga said the opening of more sectors could offer support to the rand more breathing space after its recovery from R19.35 to the dollar in April to R16.33 last week was interrupted by worries over a second wave of the virus.

Fears that the recovery in the global economy would be slower than expected have also shaved off some of the rand’s gains.

Investec chief economist Annabel Bishop said that the rand’s rebound was likely to be marred by concerns over new lockdowns and the negative effect of this on economic activity in China.

Bishop said that a new wave of lockdowns globally would scupper the anticipated recovery in global economic growth during the third quarter.

“A second wave of Covid-19 infections around the globe is not unlikely, while infection rates have not even peaked yet in Africa,” Bishop added.

“We forecast the rand average for the third quarter of 2020 (will be) R17 to the dollar,” she added.


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