SA economy could shrink by up to 17% in 2020 despite stimulus, warns business alliance


South Africa's GDP could shrink by between 10% and 16.7% this year despite stimulus efforts due to a sharp plunge in economic activity, according to Business for South Africa.

This plunge would be six to eleven times as severe as the economic contraction that followed the 2008 financial crisis, when SA's GDP fell by 1.5%. The SA Reserve Bank, by contrast, expects SA's economy to contract by a more modest 6.1% for 2020. 

In a media briefing on Wednesday, Martin Kingston, the head of the business alliance's economic intervention working group, said B4SA models predict that between 1 million and 4 million formal and informal sector jobs are at risk as economic activity stalls due to the nationwide lockdown. 

Prior to the outbreak of Covid-19, SA had already slipped into a recession in the last quarter of 2019. Kingston said this recession was now likely to last far longer than first believed. "[…] the recession is going to be much deeper that we thought and is going to endure for much longer". 

The country would be facing significant negative growth for an "extended  period time", he said, adding that it would take SA three to five years to return to its level of economic activity prior to the start of the recession, a rating downgrade by Moody's, and the impact of the coronavirus.

B4SA said it was vital for to SA to use "evidence-based policy making" to transition quickly through the various lockdown levels so that economic activity could start to reemerge. 

"Level 4 will have limited beneficial economic impact based on the current regulations," the group said in a presentation. "A significant increase in economic activity will only occur at Level 2, particularly given inter-dependencies between sectors of the economy."

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders