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The Possible Effects of the Extended Lockdown Period on the South African Economy: A CGE Analysis
Author(s) -
Van Heerden Jan,
Roos Elizabeth Louisa
Publication year - 2021
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12273
Subject(s) - computable general equilibrium , tourism , baseline (sea) , hospitality , manufacturing , economics , economy , period (music) , capital (architecture) , business , agricultural economics , macroeconomics , geography , political science , marketing , physics , acoustics , archaeology , law
The economic effects of the lockdown period in South Africa will be devastating. We simulated the industry level capacity constraints imposed by the lockdown regulations since 27 March 2020 on all industries in South Africa by reducing the amount of capital and labour available for production. We found a decrease in real GDP to 10% below the baseline level in 2020, and recovery of all industries and macroeconomic variables towards the baseline by 2027. Industries that are suffering and would continue to suffer are the hospitality and tourism industry and all industries related to it, such as transport services, as well as beverages and tobacco. Manufacturing in general is also hard hit because they were prohibited to let large groups of labourers enter their premises. The model shows that most manufacturing will suffer throughout the forecast period, which was modelled up to 2027.