Mail & Guardian -  18 June 2020 by Thando Maeko

Read online at Mail & Guardian.

Cape Argus -  18 June 2020 by Mwangi Githahu

Read online at Cape Argus.

This TIPS tracker highlights important trends in the COVID-19 pandemic in South Africa, and how they affect the economy. It analyses publically available data, research and media reports to identify current developments and reflect on the prognosis for the contagion, the economy, and policy responses.

KEY FINDINGS FOR THE WEEK

On the pandemic

• In the past week, the contagion continued to spread rapidly in Gauteng and the Eastern Cape. The daily growth rate in Gauteng (using a rolling average of the previous seven days) was around 8,5% in the week to 28 June, down from 10% two weeks ago, and in the Eastern Cape it continued to fluctuate around 7%. In contrast, for KwaZulu-Natal the daily growth rate more than doubled over the past two weeks, escalating from 3% to 8%, and in the North West it was 11%. As noted last week, new cases reported in the Western Cape declined, but the figures there may been affected by new testing protocols.
• The pandemic showed up the persistent inequalities in healthcare. The big metros have long had strong private health sectors as well as some excellent public-sector facilities linked largely to academic hospitals. In contrast, provinces like the Eastern Cape and the North West, which encompass largely historic labour-sending regions, have very limited private healthcare and weaker public systems. In this context, although the Eastern Cape has around a third as many cases per 100 000 residents as the Western Cape, it has begun to show severe strains.
• On 29 June, according to News24, the acting mayor of Nelson Mandela Bay said it should consider returning to Level 4 restrictions. But government has effectively given up on its original
  risk-adjustment strategy, in the sense that it was not modifying restrictions on economic and social behaviour by municipality depending on the level of contagion. Yet it also did not move vigorously to improve communications and resourcing to empower people and institutions to prevent new infections. The crisis in the taxi industry underscored the lack of consistency in this regard, which seemed likely to accelerate the contagion.

On the economy

• The available indicators were improved by monthly salary payments. The key economic centres of the Western Cape and Gauteng still showed a slower recovery than areas where the contagion was better controlled.
• The IMF now expects the global economy to shrink by 5% in 2020, down from its 3% forecast in April. The international slowdown will constrain recovery in South Africa, which has an unusually open economy.
• The supplementary budget announced this week will provide only a limited stimulus. Government borrowing will climb to almost 15% of the GDP almost exclusively because of the sharp decline in tax revenues due to the economic decline. In contrast, spending is expected to increase by only 1,1%, with increased healthcare, security and sanitation coming mostly out of the budgets for other functions.

Download a copy or read the Tracker online

A larger number of projects were captured in the FDI Tracker for the final quarter of 2019 due to the President’s Investment Conference held in November 2019. A total of 31 projects were captured, consisting of a mix of projects announced at the conference and those announced or taking place before the conference. Based on these developments, the fourth quarter of 2019 recorded the highest number of projects and the highest pledged investment value for 2019, with a total pledged investment value of R68.6 billion from 27 projects.

This TIPS tracker highlights important trends in the COVID-19 pandemic in South Africa, and how they affect the economy. It analyses publically available data, research and media reports to identify current developments and reflect on the prognosis for the contagion, the economy, and policy responses.

KEY FINDINGS FOR THE WEEK

On the pandemic

• Transmission in Gauteng and the Eastern Cape continued on the accelerated path that kicked off with the move to Level 4 and escalated in Level 3. In Gauteng, the number of cases nearly doubled over the week to reach 137 per 100 000 residents; in the Eastern Cape, the figure topped 200; and in the Western Cape, it was over 700. In the other provinces, the incidence remained under 30. Differences in provincial testing strategies make comparisons increasingly difficult, however.
• Government effectively reopened nearly all economic activity but continued to ban family gatherings except for funerals. It argued that relaxing restrictions on economic activity means individuals become responsible for limiting transmission. Government announced a new Ministerial Advisory Committee comprising religious and civil society representatives to promote behavioural change.
• Government accelerated economic reopening largely in response to intense lobbying by businesses, often backed by the relevant Ministers (notably for mining, tourism and small enterprise). But it also reflects a conceptual contradiction: is COVID-19 like the flu, with an inevitable winter spike that equally predictably dissipates, or like HIV or TB, where behavioural changes can prevent transmission for long periods? If it is like flu, government should focus on bolstering the health system to deal with the surge in cases; if it is like HIV or TB, it should focus on changing behaviour plus tracing and isolating new cases.

On the economy

• The economic bounce from Level 3 largely levelled out by mid-June. The banks now expect up to 10% impaired loans, compared to 6% in 2008/9. They have deferred payments for business and individuals on a large scale, but mostly only through June.
• National Treasury will announce the supplementary budget on Wednesday, promising fundamental restructuring to address the COVID-19 depression. It expects the GDP to return to 2019 levels only around 2023.
• Given South Africa’s unusual inequalities, the economic-policy response to the pandemic imposes tough choices. Hotspots have emerged almost exclusively in the metros’ dense townships and informal settlements, while workplace clusters mostly affect manual workers in mining, manufacturing, retail and public and private services. In contrast, higher-income professionals and managers can largely maintain physical distancing at work and while commuting, or even work from home. The state has effectively agreed to encourage businesses to reopen to boost incomes despite accelerating transmission, rather than extending the grants and UIF payments that enabled low-income households to avoid infections at work and in public transport.

Download a copy or read the Tracker online

This TIPS tracker highlights important trends in the COVID-19 pandemic in South Africa, and how they affect the economy. It analyses publically available data, research and media reports to identify current developments and reflect on the prognosis for the contagion, the economy, and policy responses.

KEY FINDINGS FOR THE WEEK

On the pandemic

• The move from Level 5 to Level 4 saw a sharp increase in cases, with Gauteng, the Eastern Cape and the North West now seeing exponential growth. In contrast, after an initial spike,
  KwaZulu-Natal has brought the rate of growth down sharply, and the contagion has also slowed in the Western Cape. The question remains whether government, business and civil society interventions to promote behavioural change could still rein in the pandemic and hold down the number of cases through to the end of the year.
• In the past week, it became increasingly clear that while South Africa could increase the number of hospital beds, it would struggle to get enough health professionals to care for patients in them.
• Lobbying by industries with a high risk of transmitting infections – especially personal services and entertainment – escalated. They contended it was unfair that they could not open up with the rest of the economy in Level 3. Yet the risk-adjusted approach explicitly differentiates between high-risk activities based on their perceived social benefits. To bolster their arguments, industry advocacy groups typically overstated their sector’s contribution to the GDP. For instance, the Tourism Business Council told Parliament last week that it contributed 9% of the GDP. According to Statistics South Africa, however, in 2017 the figure was under 3%.

On the economy

• The available data show an initial rebound in the economy following the move to Level 3 flattened out last week. A survey of business by TIPS, BUSA and the Manufacturing Circle found that, when UIF funds run out next month, many companies anticipate retrenchments due to low demand.
• The government plans a R500-billion stimulus package centred on guaranteed loans for small and medium business; the UIF COVID-19 TERS fund; and investment in infrastructure. As of 6 June, however, only around R500 million had been lent under the R200-billion loan guarantee scheme, which accounts for the lion’s share of the proposed stimulus package.
• Virtually any effort to mobilise funding on the scale proposed for the stimulus package will affect the power as well as profits of different social groups, and consequently run into heated debates and intense lobbying. In the past week, debates swirled around the reprioritisation of the national budget, the use of UIF funding, the role of impact investments, and borrowing from the IMF and the World Bank. The government approached the IMF for a loan of US$4,2 billion, or R70 billion.

Download a copy or read the Tracker online

Engineering News -  12 June 2020 by Simon Liedtke

Read online at Engineering News.

South Africa had a trade surplus of R35 billion in the first quarter of 2020, up from a trade deficit of R4 billion in the first quarter of 2019. With the exception of the first quarter of 2017, South Africa has had a trade deficit in the first quarter of each year as far back as 2010. In 2020 constant Rand terms, imports declined by 5% between the first quarter of 2019 and the first quarter of 2020, but grew by 30% from the first quarter of 2010. In contrast, exports grew by 8% in the year to the first quarter of 2020, and grew by 55% between 2010 and 2020.

See Imports localisation and supply chain disruption study - First Quarter 2020

Business Day - 8 June 2020 by Neva Makgetla (TIPS Senior Economist)

Read online at Business Day.

Or read as a PDF.