GDP shrinkage of 12%: It’s not the virus, but the lock-down, stupid!

Johannes Wessels (@johannesEOSA1) & Mike Schüssler (@mikeschussler)

At the end of the initial 3 weeks lock-down a GDP decline of about 5% was considered as quite a catastrophic outcome. Even at that level, it was considered worth the price since delaying the spread of the Covid 19 virus would give a window of opportunity for the health sector to get beds, ventilators and care protocols in place for the spike that would inevitably come.

The minister of trade and industry (dti), Ebrahim Patel, however dismissed the negative projections of economic shrinkage as mere “thumb-sucking”.

After prolonging the hard lock-down with just a gradual easing to level 4 to end May, the growing queues of the hungry waiting for food parcels, the increase in the claims from the unemployment insurance fund and the drastic shrinking of the state’s purse, would make a 5% decline in GDP a dream outcome.

The GDP figures for Q1 2020 will only be known end June. Data from other countries indicate that those whose governments had opted for a hard lock-down are in for excessive economic damage.

Change in GDP trend is the difference between growth in 2019 and 2020 1st quarters, implying that the Philippines that experienced a change of -6% went from 5.9% GDP growth in Q1 2019 to -0.1% in Q1 2020. This chart reveals the following:

  • Countries with a hard lock-down that kept only essential services and providers open, saw an average decline of 5,2% in GDP trend.
Continue reading “GDP shrinkage of 12%: It’s not the virus, but the lock-down, stupid!”

Fragmentation of South Africa: Is the ANC succeeding where the NP failed?

Remember, South Africa as a unitary state is a recent experiment and the jury is still out to assess its success or failure…” These words by Lawrence Schlemmer, one of the foremost analytical minds in SA during the latter quarter of the 20thC are today far more relevant than when he uttered them in 1996 when we were enjoying a drink whilst waiting at the late Jan Smuts Airport on delayed flights. Having just read Jacques Pauw’s The President’s Keepers I was starkly reminded of Lawrie’s words.

Lawrie Schlemmer

South Africa is unravelling…

I had the privilege of meeting Lawrie when he was a strategy advisor to the Urban Foundation in the years 1987 onwards. His sharp intellect and wit made him an impressive debater. He was totally independent – apart from his utter dependence on nicotine.

Continue reading “Fragmentation of South Africa: Is the ANC succeeding where the NP failed?”

Of people and enterprises in South African towns

Western CapeOrderliness in enterprise development in South African towns has been observed as statistically significant correlations between different characteristics of South African towns. One of the first correlations noted was a statistically significant positive relationship between the population of South African towns and the number of their enterprises. This was observed in the Free State, the Northern Cape, the Western Cape (see graph) and the Gouritz Cluster Biosphere Reserve. In fact, towns in the Eastern Cape Karoo exhibited such relationships over a period of a century. One can conclude the relationship is ubiquitous in South Africa. Continue reading “Of people and enterprises in South African towns”