ACCA: Advent of Covid-19 extremely harmful to a country already in technical recession
Tito Mboweni's recession recovery measures will be overwhelmed by economic challenges.
Despite the presentation by Finance Minister Tito Mboweni of a budget widely deemed, among majority stakeholders, to be balanced while geared towards stimulation and recovery of the sluggish economy the country, turnaround efforts will be unlikely to achieve much given the economic damage as a result of COVID-19.
The country has subsequently witnessed unprecedented challenges not only on the economic front but in social and healthcare areas through the unexpended outbreak of Covid-19 pandemic in the middle of a confirmed technical recession very early in the year.
The Covid-19 outbreak began to hit South Africa a couple of weeks after the Budget announcement and continued to grow in number of reported cases in the month of March 2020, reaching a 51 mark on Sunday 15 March when the President of South Africa announced a state of disaster and some measures to curb the spread and impact of the outbreak.
President Cyril Ramaphosa responded first by introducing a policy of social distancing and then of lockdown to prevent the exponential growth of new infections impacting the nation. However, while this lockdown will doubtless save lives, there are serious economic repercussions to consider.
“Any lockdown will have medium to long-term effects, and businesses may need a prolonged period of time to recover from any loss of income while still servicing fixed costs that prevail in spite of lockdown, such as rentals, staff salaries, and interest expenses , ”Says Pat Semenya , head of ACCA South Africa . "While the government and business have created relief options for many of these costs, the damage to business will remain significant."