South Africa should brace itself for a period of deep economic decline, with economic growth forecast to decline by between 2% and as much as 10%, Institute of Race Relations (IRR) analysts warn.
The IRR had pencilled in a contraction of at least -5%. It pointed out that the most optimistic growth forecast predicted a roughly 2% decline in GDP, with less optimistic predictions anticipating a decline of up to 10% or more.
IRR analyst Nicholas Babaya warned that such a decline in growth would have a catastrophic effect on the lives and livelihoods of South Africans.
‘The correlation between economic growth and living standards is very strong. We anticipate that South Africa’s pending economic crisis will translate into a severe decline in the living standards of almost all South Africans, wiping out much of the progress made in raising those standards after 1994,’ he said.
Babaya added: ‘Worse, if the government ignores the economic risks, its Covid-19 containment measures are bound to fail, as people will be too desperate and hungry to comply with isolation prescripts. We will have neither flattened the curve nor saved the economy – the worst of both worlds.’
The IRR said that in view of this, preventing a humanitarian catastrophe in South Africa required maintaining the greatest possible degree of economic activity within the limitations imposed by sensible isolation policy.
It said in a press statement: ‘The distinction between essential and other economic activity must be done away with and any business that can operate without posing a serious danger to public health, based on epidemiological data analysis, should be allowed to do so.’