The announcement by President Cyril Ramaphosa of the country moving to an adjusted Level 2 lockdown is positive news for the economy, North-West University Business School economist Professor Raymond Parsons says.
He says that, although the recent better-than-expected second-quarter gross domestic product growth figures are widely anticipated to put the economy back on track to ‘rebound’ to a 4.5% to 5% growth rate this year, the economy is not yet out of the woods.
Moreover, he notes that the third wave of the pandemic is not yet over and that the importance of the vaccine programme remains.
“This economic caution is necessary because it is widely expected that South Africa’s growth performance in the third quarter remains hostage to the costs of the civil unrest and violence in July, and where recent high-frequency data such as business confidence and manufacturing production are already strongly negative,” Parsons states.
He indicates that the third quarter economic growth will bear the brunt of the July events.
“Hence, the more the economy can become ‘lockdown free’, the more it can help to soften these economic losses,” he posits.
Parsons says that, by continuing to steadily open up the economy as circumstance permit, especially for business sectors hardest hit by the lockdowns, the economy’s recuperative powers will be strengthened.
“The highly positive growth expectations for the year as a whole are then more likely to be met.
“While there are clearly still uncertainties around the future trajectory of the virus, South Africa must now, as far as possible, promote short-term economic and business activity, as well as urgently tackle the major structural obstacles that still lie in the path of future sustained job-rich growth,” he says.