SA economy stagnates while government tweaks lockdown – Dwaine van Vuuren

Calls to end the lockdown in South Africa are growing. The ban on tobacco is said to be costing the country R35-million in tax revenue each day. The alcohol ban is reported to have put investment projects worth at least R12.8 billion on hold. Experts are questioning whether the worldwide rush to lock down countries was the right thing to do. Dwaine van Vuuren, trader, investor and quantitative analyst, is adding his voice to the pleas for government to relax lockdown. Van Vuuren paints a grim picture. He looks at Covid-19 infection rates and economic activity in four provinces and concludes that having the economy running at 50-60% capacity (depending on province) for any longer will have devastating consequences that will make any worst-case Covid-19 scenario seem like a picnic. – Renee Moodie

These charts show why lockdown must be relaxed

By Dwaine van Vuuren*

The charts below show how the SA economy has been stagnating at 60% of pre-lockdown activity for the entire duration of the Level-3 lockdown, despite attempts by the government to constantly tweak the regulations to revive the economy.

Read also: How SA economy is emerging from Covid-19, in pictures – Dwaine van Vuuren

The charts show that unless lockdown regulations are materially eased, the economy is unlikely to improve in any meaningful way.

To have an economy running at 50-60% capacity (depending on province) since early June 2020 for any longer will have devastating consequences that will make any worst-case Covid-19 scenario seem like a picnic. Economy, livelihoods, businesses, downstream value chains etc. will all be decimated and never recover, which will lead to long term negative effects for which we will pay a heavy social and financial price.

Dwaine van Vuuren

Given that some provinces have clearly peaked in daily infections the government can ill afford the “luxury” of further sustaining the current draconian (by world standards) lockdown, lest the damage becomes long lasting.

Given the different infection maturity paths, lockdowns might have to be eased per province, since there is up to a six-week lead between Cape Town and KwaZulu-Natal and Free State for example.

But we cannot afford to keep Gauteng and Western Cape locked down longer to wait six weeks for these other provinces that are later on the infection curve as this would come at too great a cost.

  • Dwaine van Vuuren has a Bachelor of Science Honours degree majoring in mathematics, computer science and statistics and is a full-time trader, investor and quantitative analyst. His passion for numbers and keen research and analytic ability has helped grow RecessionALERT into a company used by hundreds of hedge funds, brokerage firms and financial advisers around the world.

Read also: SA less than half way through Covid-19 pandemic – Dwaine van Vuuren