The COVID-19 pandemic, also called the coronavirus pandemic, is an unprecedented event in modern world history. While comparisons can be drawn to past epidemics and other examples of global disruption such as wars, the situation is nonetheless unique in its impact and unpredictableness.
COVID-19’s lasting impact is twofold. There is the ongoing threat to healthcare infrastructure and the physical wellbeing of nations. Then there is the financial fallout being caused by reactions to try and contain the pandemic. Though it is broadly and correctly accepted that avoiding the possibly devastating human death toll caused by COVID-19 is the top priority, a sober look at the economic consequences will help organisations make the correct decisions when recovering from the epidemic.
Impact of COVID-19 on SA economy
South Africa’s economy was already in a tough position before the pandemic’s arrival. The combination of public sector debt, particularly among major state-owned enterprises, ongoing load-shedding that inhibits productivity of major economic sectors such as mining and manufacturing, and an already-low growth rate, have created a precarious situation that demanded urgent remedies.
But whatever time stakeholders thought they had to respond, that was stolen when COVID-19 appeared. After a brief period to study the infection rate and impact of the pandemic in other countries, the Presidency decided to act and announce a lockdown that would help slow the spread of the virus as well as give time for medical responses to prepare.
South Africa had taken among the most aggressive action in the world against COVID-19, learning from the devastation currently being experienced in Italy and Spain. Countries that have taken a more wait-and-see attitude, implementing lighter measures, are experiencing much higher surges than those that acted more heavy-handedly.
Nonetheless, mitigating the virus won’t mitigate financial damage, and many experts now agree that a global recession is both very likely and due to last for a while. As even the world’s healthiest economies now face negative growth rates, developing economies find they lack the financial resources to accelerate recoveries.
In South Africa, the already precarious position of its finances will undoubtedly become a crisis that nobody can deny. To mitigate this crisis, it is important to understand how this crisis will likely manifest.