IQbusiness, the independent management consulting firm, has forecast that nearly three million jobs will be lost in the country due to the impact of COVID-19 on the economy.
The company, in its COVID-19 Pandemic Sector Impact Report, has forecast a steeper decline in the gross domestic product (GDP) than the 7%, put forward by the reserve bank last month.
The company compared the findings of the Stats SA Business Impact Survey of the COVID-19 Pandemic in South Africa and the National Treasury and SA-TIED paper, Impact of COVID-19 on the South African Economy and drew parallels to its own sector impact analysis.
Sifiso Skenjana, chief economist at IQbusiness, said more than 30% of the occupations in the economy are elementary occupations (hitch hikers as per our commuter analogy) and are most at risk of being cut.
“We model as our base case that the second-quarter GDP contraction will be approximately 33.8% and the full-year GDP contraction will be 17.9%. In addition, the job losses we estimate in our base case are approximately 2 939 000 jobs in 2020,” said Skenjana.
“There is however upside risk to our base case given the surge in infection rates in the Western Cape – the third largest provincial economy – and rising hotspots in Gauteng, the largest provincial economy in the country.”
He added that the firm’s best-case scenario would see a GDP contraction of 10.8% and approximately 1.7 million jobs lost.
Sectors such as manufacturing, construction, hospitality, retail and financial services are expected to take the biggest hit.
Riaan Eksteen, managing director of Mazars Financial Services Africa, said financial services firms will have to contain operational costs to remain competitive and even thrive, in a post-COVID-19 economy.
“The most common responses that we have observed include addressing the immediate liquidity concerns, quick responses to reconfigure operations to serve clients given socially distanced and lockdown requirements, several cycles of reprioritisation of strategic objectives and strategic initiatives in the short term, and formulating and executing on short term tactical cost containment imperatives,” said Eksteen.
