09/09/2020 | By Admin
The severe contraction in SA’s GDP in the second quarter of the year was expected but still paints a horrific picture of the damage that the lockdown restrictions have done to our economy.
BLSA believes we cannot afford any further restrictions to economic activity and calls on government to urgently lift existing restrictions. Our call is given further credence by the declining trend of the infection rates throughout the country. Furthermore, the healthcare system is no longer overwhelmed and can comfortably cope with the current levels of the pandemic.
We believe this is possible. The health protocols, including social distancing and wearing of masks, are well entrenched and should be the only requirements for the resumption of activities that still operate under restrictions.
The guidelines for lockdown level 1 state that all Covid-19 health and safety protocols must be followed at all times, including observance of guidelines for social distancing, sanitation and hygiene, and use of appropriate personal protective equipment, like cloth face masks, as determined by the National Department of Health.
BLSA believes the time is now right for this to be implemented. We believe that applying just that one condition to all economic activity will be sufficient and no other restrictions are necessary, apart from some that will still be required for international travel. Under level 2, the main remaining restrictions affect restaurants, public gatherings? trading hours for bottle stores and international travel.
Restaurants have a curfew between 10pm and 4am and the number of guests is limited. BLSA believes the curfew should be lifted entirely while the social distancing requirements in themselves will naturally restrict the number of guests. Similarly, for hotels and other accommodation businesses, the social distancing restrictions will enforce a limited number of guests. Specific restrictions by government are not necessary; naturally the role of Government inspectors in overseeing compliance will health protocols will be an important one.
Public gatherings remain problematic in terms of social distancing. However, the sensible arrangement would be to place the responsibility for social distancing on event organisers. For sporting events, for example, organisers could close off certain seats so that spectator seats are at least two metres apart. Any other public gatherings should be allowed only if the organisers can enforce social distancing.
The blanket ban on international travel should be replaced with a more targeted approach: allow all visitors in from certain countries where infection rates are under control. For other countries, enforce a 14-day quarantine period, with testing. Lift all restrictions on outbound travel and apply the same protocols to returning travellers: quarantine and testing if they visited a high-risk area.
The restrictions on business activity that the social distancing protocol itself imposes mean SA still cannot get back to full operational capacity. But we need to get to a level where we are as efficient as possible without risking lives. We believe this is achievable within the framework of simply observing the health protocols.
The country simply cannot afford to continue operating with further restrictions. Doing so will delay any meaningful economic recovery with more businesses being forced to close down and more jobs being lost. It’s imperative for every facet of the economy to be able to function to the fullest extent possible within the scope of the health protocols. In such catastrophic economic times, saving even one job has important ramifications for the rest of the economy: that person is able to continue feeding her family and paying taxes and will not need to become part of SA’s ever-increasing social welfare burden.
GDP fell by over 16% between the first and second quarters of 2020, giving an annualised negative growth rate of 51%. An annualised growth rate shows what growth would be over a full year if the quarter-on-quarter growth rate were to occur four times in succession. What’s particularly worrying, though, is that three of SA’s most labour-intensive industries were hardest hit. On an annualised basis, construction contracted by 76.6%, manufacturing output fell by 74.6% and mining output by 73.1%.
Overall, BLSA commends the way government has handled this pandemic, particularly at the beginning of the Covid-19 outbreak. The hard measures it instituted in March resulted in us passing the peak infection rate period earlier than forecast, but the strange “product by product” approach to releasing the lockdown in May/June certainly contributed to a greater decline in Q2 GDP than needed to be the case.
However, now it is time for government to shift gears and focus more on livelihoods and protecting jobs. Impose only the overarching principle of observing the health protocols and allow businesses and other organisations to operate as optimally as possible within that restriction. The government needs to trust its citizens to observe the health protocols and for businesses to behave responsibly. We simply cannot afford any other way.
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