Amid the significant economic risk that the coronavirus poses to South Africa, President Cyril Ramaphosa has announced that the government is in the process of finalising a stimulus package that would help to mitigate the shocks facing the country’s economy.
The integrated nature of the global economy means the effects of the virus — beyond the health risks — have only grown as the disease has spread across the world. Companies have either been hit by supply-chain problems, thanks to lowered production in China; or from having fewer customers, with companies such as airlines already filing for bankruptcy. European airlines have asked for support, while regional airline Flybe closed after the slump in travel added too much pressure on top of its existing financial woes.
In South Africa, Ramaphosa said that the virus has caused significant decline of “economic activity in our major trading partners, a sudden drop in international tourism and severe instability across all global markets”.
China, which is South Africa’s biggest trading partner, has seen a slowdown in production since the Asian country effectively shut down its economy to the rest of the world following the outbreak.
South Africa’s economy is already in the midst of a recession and the travel ban announced by Ramaphosa is likely to exacerbate the ailing fiscal position.
“The anticipated effects of the decline in exports and tourist arrivals will be exacerbated by both an increase in infections and the measures we are required to take to contain the spread of the disease,” he said.
Ramaphosa said the package will contain various “fiscal and other measures, will be concluded with business, labour and other relevant institutions. It is clear that this disease will be extremely disruptive.”