South Africa’s economic growth rate collapsed after the global financial crisis, and we have never properly recovered. Slow growth after the global financial crisis is the main reason that unemployment and poverty have risen, that our public finances are a mess, and that the country can afford so paltry a response to the current pandemic.
In the decade after the global financial crisis, South Africa experienced a 60% reduction in average annual growth compared to annual growth in the previous decade. This means that we missed out on output valued at R3.7 trillion between 2009 and 2019.
Estimates of the size of the economic contraction for 2020 range from 4% to 15% of GDP.
Policymakers cannot assume that the economy that emerges after the lockdown will be capable of generating even the very low rate of growth that South Africa had over the past decade. The Covid-19 crisis means that we may permanently lose some of our industrial and commercial capabilities.
It is vital that the recovery from the Covid-19 crisis not be a repeat of the global financial crisis. The damage incurred by the pandemic requires significant economic reforms if South Africa is ever to fully recover.