Trade and Industrial Policy Strategies' (TIPS's) 'Tracker: The economy and the pandemic' highlights important trends in the Covid-19 pandemic in South Africa and how they affect the economy.

Since August 18, when the country moved to Level 2 of the lockdown, the number of cases has plateaued at over 1 500 new cases daily.

For comparison, reported infections peaked at over 12 000 a day in mid-July. The current level of reported daily diagnoses was last seen in early June. The rate of transmission remains far lower than three months ago, but has climbed by 75% over the past month, leading to a modest increase in new cases in the past week.

With new cases falling until last week, the government further relaxed restrictions from September 21, mostly permitting much larger gatherings and shortening the curfew. Unless stronger behavioural changes bring transmission again under control, however, cases will start accelerating in the coming weeks.

The results of reopening without adequate protection can be seen Europe and the US. In some areas, new cases now exceed April levels, bringing renewed restrictions on businesses, especially bars and personal services, and on the size of gatherings.

The evidence indicates that higher transmission resulted largely from reopened nightlife and universities combined with increased tourism. In the US, initial studies suggest that around a fifth of cases are traceable to bars alone.

ON THE ECONOMY
The gross domestic product figures for the second quarter of 2020, released on September 8, revealed the extraordinary impact of the pandemic.

Evaluation of the (limited) data on monthly trends shows that the decline took place exclusively during the full lockdown in April. It was followed by a strong although incomplete rebound in May. Since then recovery has slowed, despite the elimination of almost all legal restrictions with the move to Level 2.

The pandemic has ushered in a new world for state-owned companies, which have found they can no longer easily obtain subsidies from the state when they run substantial losses, especially when they have no core socioeconomic mandate. Among others, South African Airways, Denel and the South African Broadcasting Corporation are in a financial quandary with no obvious resolution, and Eskom has had to accept that recovery will require faster erosion of its monopoly on the national grid.

Efforts to develop recovery plans intensified in the past month as the reopening of the economy has returned attention to more fundamental constraints on growth. The discourse has generally centred on supporting existing formal businesses, however, without complementary programmes to promote more inclusive growth. The auto and music industries point to the tough choices required in light of the economic havoc caused by the pandemic both nationally and globally.