Shrinking GDP sets ‘ominous tone’ for SA’s future, warn PANDA actuaries, economists

PANDA describes itself as a collective of leading actuaries, economists, mathematicians, medical professionals, lawyers and businesspeople working to bring more data and analytics to the decision-making table in South Africa. PANDA has repeatedly warned that the South African Covid-19 lockdown has been too strict, with more lives likely to be lost through poor economic decision-making around the pandemic than the deadly coronavirus. In its latest analysis, PANDA warns that the first quarter Gross Domestic Product (GDP) figure sets an “ominous” tone for the future. The economy was shrinking before the government took steps to shut down the economy. PANDA is calling for a full lifting of restrictions to help the economy heal faster. – Editor

SA Q1 GDP figures a reminder of SA’s economic challenges

The 2% annualised decrease in South Africa’s first quarter (Q1) gross domestic product (GDP) has set an ominous tone for the remainder of this year and the country’s future.

“Considering that South Africa only went into lockdown in response to the spread of COVID-19 on 26 March, right at the end of Q1, we are yet to see the true economic impact of the current lockdown and are deeply concerned by the compounding challenges the SA economy now faces,” said Pandemics – Data and Analytics (PANDA) member and economist, Russell Lamberti.

With contractions in half of the sectors assessed during Q1, most drastically in the mining and manufacturing industries, the lockdown which has continued at varying levels during Q2 will undoubtedly exacerbate this decline across the board. National Treasury and the South African Reserve bank estimate that South Africa’s GDP could shrink by 7% this year as a result of the COVID-19 pandemic and lockdown policies. One National Treasury scenario envisages as much as a 16% decline in GDP in 2020.

“The lockdown has caused a sharp contraction in production and exchange in the economic system, some of which is likely to recover over years, rather than weeks or months. The temporary and permanent aspects of that contraction have had and will continue to have an impact on the ability of millions of people to make and maintain a sustainable living,” said Lamberti.

Over the past few months, PANDA has argued that estimates made at the onset of the lockdown by government stakeholders, that over 40,000 fatalities were likely, were grossly inflated. The massive job and revenue losses during the lockdown, however, have driven more people into income and food insecurity and over 2 million people at least temporarily out of employment by PANDA’s estimations. A significant proportion of the workforce now face long term unemployment. This reduction of income due to the lockdown is, in turn, estimated to negatively impact life expectancy. PANDA estimates that the lockdown will result in far more years of lost life than Covid-19, across the South African population.

Numerous appeals to President Ramaphosa have been made in order to present these findings and have the current national lockdown lifted at a faster rate, with little avail. “With some portions of the economy completely shut down for three months now, it is urgent that lockdown be lifted completely and people be allowed to manage their own risks and begin repairing the damage to their lives and businesses,” concluded Lamberti.

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