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The SA economy will likely suffer a little more pain, and the country’s economic centers are likely to remain at Tier 4 of the blockade for the foreseeable future.
President Cyril Ramaphosa announced Wednesday night that the government would be working to bring most of the country to Level 3 alert, while the parts of the country with the highest infection rates remain at Level 4.
The data shows that infections are mainly concentrated in municipalities and metropolitan districts of the country. However, the government will announce changes to the Tier 4 regulations to expand the commercial activities they can afford in the retail space and electronic commerce.
Hugo Pienaar, chief economist at the Office of Economic Research, said it appeared that the government was beginning to heed calls for faster relaxation of closure regulations. But with Tier 4 applied across the country for the next two weeks, as well as metropolises like Cape Town that are likely to remain Tier 4 beyond May, it means the “economic pain” will persist. “Everyday life will continue to get worse, especially for the most vulnerable in society,” he said.
Commenting on the Level 4 regulations that should be amended, Pienaar said the government should allow all clothing to be sold. There were public protests about restrictions on certain items of clothing that can be sold at Level 4. Flip flops and curtains are among the items that are controversially not available at Level 4, Business Insider reported. Pienaar also thinks that all e-commerce should be allowed at Level 4.
Is the worst over?
Alexander Forbes chief economist Isaah Mhlanga also hopes that the impact of the blockade will be felt in the future, but he is optimistic that the worst is over. “As far as the economy is concerned, it would indicate that the worst of the damage is behind us,” he said.
While the highest infection rates are found in economic centers, Mhlanga noted that some sectors do not operate in cities. “We have a significant proportion of economic activity that does not occur in cities, although the administration of those sectors may occur in cities,” he added.
Tutwa Consulting economist Azwimphelileli Langalanga sees no reason for strict conditions to be maintained in metropolitan areas. “It is something that he (Ramaphosa) has to consider carefully. Where there are high infections there is high economic activity, you cannot see the restrictions being relaxed in areas outside the economic engines of Johannesburg, Pretoria, Durban and Cape Town, Langalanga said.
Hard balancing act
The president appears to be putting pressure on all parties, whether the tobacco industry is asking for the trade or people who want to exercise for longer hours, the risk of infections increasing. “It is a very difficult balancing act that the president is facing right now,” said RMB analyst Matete Thulare.
“That’s the sad thing about it all, you can’t please everyone at the table,” said Thulare.
