Concerns over SA's economic growth if COVID-19 not controlled soon

The South African Reserve Bank has slashed its growth forecasts for this year, predicting that the economy could shrink by between 2% and 4%.

South African Reserve Bank (Sarb) Governor Lesetja Kganyago. Picture: @SAReserveBank/Twitter

JOHANNESBURG - There are concerns that the country's growth rate will continue to plunge if the coronavirus is not brought under controll soon.

The South African Reserve Bank has slashed its growth forecasts for this year, predicting that the economy could shrink by between 2% and 4%.

In its bi-annual monetary policy review, the bank said that it was worried about growth, which was unlikely to exceed 1% next year.

Prior to the lockdown, South Africa had already been battling weak growth.

Director and economist at Pax Africana Holdings Ndumiso Hadebe said that the longer the country stayed in a lockdown, the worse the situation would become.

"Based on our own estimates, we had been looking at a contraction of between 2% and 6% depending on the severity of the COVID-19 pandemic and how soon in South Africa we're able to flatten the curve."

He said those working in the tourism sector were fighting to survive.

"In addition to that, they're also very vulnerable to chronic poverty and exposure to prolonged unemployment in the South African economy."

With government working towards flattening the curve, the reserve bank is hoping that the situation will change in the months to come.

Meanwhile, FNB chief economist Mamello Matikinca on Monday told Eyewitness News that government should use the opportunity to restructure its expenditure.

She said the country was not going through tough economic times due to the pandemic alone.

“Global growth is going to take a big hit. We’re already seeing estimates of growth globally contracting by around negative 3%,” she said.

But Matikinca said government needed to reflect on its plans.

“If anything, this has highlighted the structural inefficiencies in the economy. I think we need to take this time to rethink the growth plan,” she added.

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