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Trade and Industrial Policy Strategies' (TIPS's) 'Tracker: The economy and the pandemic' highlights important trends in the Covid-19 pandemic in South Africa and how they affect the economy.
The country moved into Level 3 this week, bringing a heightened risk of contagion as around five-million people returned to work and church services reopened. From the past week, however, the pandemic accelerated in Gauteng and the Eastern Cape, with the growth in infections rising to almost 6% a day. At that rate, the number of cases will double every two weeks, and the move to Level 3 could aggravate the situation further.
The Cape Town health system has begun to show signs of strain, with high levels of infection among health workers leading to shortages and efforts to recruit from other provinces. Still, the rate of infection has slowed, apparently in large part due to improved tracing. If these efforts deteriorate, however, or Level 3 means the contagion takes off again, further lockdowns may become unavoidable.
Despite the move to Level 3, there was still little sign of a government education campaign to empower people to manage the new risks they face at work, in public transport, in their families and in the newly reopened spaces for worship.
Clusters continued to emerge in mining, retail, the public services and some manufacturing establishments. Outbreaks also appeared in a few residential institutions, which in other countries have had a disproportionate effect on mortality from Covid-19. But only the mining industry provided an overview of trends, making it difficult for the public to identify the main areas of risk.
The trade data show that South African exports declined by 55% in rand terms in April, although imports fell only 7%. For comparison, total US imports dropped 20% in April, while for China they fell 6%. The largest decline in South Africa’s exports emerged in the auto industry, followed by gold and base metals.
The extent of fiscal pressure on municipalities because of the pandemic began to emerge in May. Because the metros depend primarily on their own revenue, rather than national grants, they faced the greatest difficulties, since their income plummeted while demands increased. The national government has committed R20-billion for assistance, but has not yet indicated allocations between municipalities.
In any case the funds will likely only become available in early August, following the adjustment budget.