Cape Town - Bankers and business leaders have said South Africa’s economy is entering uncharted territory as a result of the Covid-19 pandemic and the start of the 21-day lockdown, beginning at midnight.
Absa economist Peter Worthington said: “The announcement of a 21-day mandatory lockdown in response to the Covid-19 pandemic is likely to push South Africa even deeper into recession; a plausible scenario of the impact of the shutdown on GDP could see real GDP contracting by 23.5% in the quarter-on-quarter seasonally adjusted annual rate (Saar) in Quarter 2, and about 3% overall in 2020, with risks skewed to the downside.”
Worthington pointed out that a 23.5% q/q Saar reduction in GDP in Q2 did not imply that the economy would shrink by nearly a quarter.
“These are annualised data, meaning the percentage change in levels from Q1 to Q2 would be 6.5%,” said Worthington.
He added: “South Africa was already in recession when the Covid-19 pandemic arrived to undermine the economy further.”
Chief executive of Customer Experience Company nlighten Nathalie Schooling said: “From an economic perspective, we are entering uncharted territory. Make no mistake about the challenge ahead.
“With commerce effectively shut down for a period that could last six months or more, the risk is that the global economy will spiral into a prolonged depression,” she said.
Schooling added: “It’s in no one’s interest for otherwise viable companies to go under. The only way this can be prevented is through a mixture of government support and co-operation between businesses and their financiers to defer obligations.”
Meanwhile the Financial Sector Conduct Authority has said it will “do its best to accommodate anyone experiencing problems in complying with specific regulatory requirements because of the impact of Covid-19.”
The authority said it would extend the period for the submission of certain financial statements by four months.
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