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President Cyril Ramaphosa says that the decline in South Africa’s GDP during the second quarter of 2020 reflects the severe impact of the global coronavirus pandemic on the economy and should prompt all South Africans to do everything possible to help rebuild the economy.
Although the contraction of 16.4% (unadjusted, -51% annualized) in the second quarter represents an anomaly due to the blockade imposed at the end of March, these figures reinforce the importance of allowing a strong rebound in subsequent quarters, presidency it said in a statement.
“Countries around the world are facing significant economic upheaval as a result of the pandemic, which has caused the worst global recession in decades. South Africa has not escaped these realities.
“The coronavirus represents a social and economic crisis unique in a century, with production disruptions, a synchronized decline in export markets, and a prolonged decline in demand from many service industries.”
The economic circumstances created by the pandemic have caused hardship for many South Africans and threaten the survival of businesses in the worst affected sectors, the presidency said.
Having acted swiftly and decisively to save lives and control the epidemic, the presidency said the government’s focus is now on economic recovery. This includes:
- The rand 500 billion emergency aid package announced by the president in April has averted the worst effects of the pandemic;
- More than 40 billion rand have been paid to more than 4 million workers through the Unemployment Insurance Fund to avoid layoffs, and more than 5 million beneficiaries have received the special Covid-19 grant for social relief of the anguish;
- A total of 25 billion rand has been paid through supplements to existing social grants, as well as an additional caregiver allowance for recipients of the child support grant;
- Tax relief worth more than R70 billion has been extended to struggling companies. These and other measures have provided needed relief to vulnerable individuals and businesses across the country;
As the epidemic continues to stabilize, a strong recovery is possible through targeted actions to restore economic growth and protect the livelihoods of our people, the presidency said.
“Now is the time to act quickly and boldly to put South Africa on a rapid growth trajectory. We cannot continue business as usual. We will use this moment of crisis to build a new economy and unlock the true potential of South Africa, ”said Ramaphosa.
Reconstruction
Ramaphosa said three important processes are taking place there to support economic recovery.
“First, the social partners will soon present a Social Pact on Economic Recovery to the President after discussions in the National Council for Economic Development and Labor. This social pact identifies areas of convergence and provides a basis for joint action by all partners ”.
The government will then finalize its economic recovery strategy, which will build on this social compact and outline a clear, action-oriented plan to stimulate economic growth and enable rapid recovery.
“This strategy will include urgent fast-track structural reforms, expanding employment programs, facilitating large-scale investments in infrastructure projects, and implementing measures to promote localization and improve regional and continental trade.”
Finally, the presidential employment stimulus will begin to be implemented within the next month and will expand opportunities through public and social employment to counter job losses, the presidency said.
“The president will make further announcements in this regard in due course and the president calls on all sectors of society to act with unity and purpose to rebuild the economy for the benefit of all South Africans,” the presidency said.
Read: South Africa’s GDP Stalls 51% in Q2
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