The economic impacts and prospects of Covid-19 – Bizcommunity.com

With South Africa headed into a 21-day lockdown this week, combatting the threat of the Covid-19, has been made a key national priority. Never before in our democracy have we seen a national lockdown taking place, but the gravity of the current situation absolutely demands it.

Futurist, Marius Oosthuizen

Being a few weeks behind some other affected nations, Oosthuizen notes that South Africa is fortunate to have real-life case studies of countries that have handled this crisis well such as South Korea and those that havent, such as Italy and the US. We know from the case of South Korea that the only way to effectively curb the social spread of the virus is through a combination of government and civil action early on.

He notes, however, that South Africa remains particularly vulnerable from an economic perspective. The pandemic started as an infection problem with a supply-side disruption from China, but has gradually moved over to a lock-down environment causing a global economic slow-down, which has precipitated the combination of a disease burden in society and a currency and fiscal crisis something that South Africa is at major risk of.

The second wave of impact will be the disease burden, social distancing and psychological strain that will be felt over April and May. The scale and rate of infection will depend on the scale and effectiveness of response, he says, noting that the third and final wave of impact that the country will likely experience over June and July, will be based on adapted conduct, the level of supply disruptions, fiscal restructure and decline in earnings.

South Africa, in addition to already being in a fragile economic state prior to this pandemic, is dependent on commodity exports and is highly exposed to Asian and US consumer markets. It is for these reasons that I believe we will face a contraction in GDP of between 3-5% as a result of Covd-19, says Oosthuizen.

This means that South Africa risks seeing the second scenario, the perfect storm, play out. Here we would see a fast rate and large scale of infection, with ineffective response, he warns, noting that South Africa is particularly vulnerable to this scenario considering the number of people with respiratory diseases like tuberculosis, as well as the high rate of human immunodeficiency virus (HIV) among the population.

Fortunately, Oosthuizen believes that the measures needed to avoid the perfect storm scenario are completely within the countrys control. We are seeing these measures being implemented now with the national lockdown, which will hopefully take us into an after the storm scenario. If this scenario plays out, the real challenge will be the economic recovery, which is why the Department of Small Business Development has already launched a debt relief fund to help mitigate the impact on smaller businesses.

The fourth and final potential scenario that Oosthuizen presents, namely Africa spared, is a major wildcard which he says is extremely unlikely at this point. This is a scenario where, for some exogenous reason such as climate, Africa only has a limited number of infections with effective responses.

At this point, Oosthuizen has made it clear that South Africa is likely facing either the perfect storm or an after the storm scenario. The most important thing for South Africa to do now, is accept these two scenarios and do everything in our power to avoid the perfect storm from playing out. This is especially crucial considering how vulnerable some parts of the African continent are and how devastating this pandemic would be if it were to continue spreading.

Of course, for this to be effective, South African people and businesses need to do everything in our power to follow these national efforts together, we can flatten the curve. says Oosthuizen.

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The economic impacts and prospects of Covid-19 - Bizcommunity.com